The rate of homeownership for racial minorities increased in 2022 (the year with the latest data), with Asian and Hispanic Americans achieving historic peaks of 63.3% and 51.1%, respectively.
However, despite these advancements, great disparities still exist among racial and non-native ethnic groups, notably with black homeowners. People of color continue to endure significant buying challenges throughout and after their home purchases, according to the newest report released by the National Association of Realtors (NAR).
The report, entitled “2024 Snapshot of Race and Home Buying in America” dives into the homeownership trends within each racial group and explores obstacles encountered during the journey to homeownership.
Leveraging another report to bolster this data, the “Profile of Home Buyers and Sellers,” explores the demographics of home buyers, motivations for purchasing types of properties acquired, and the financial profiles of these people—specifically focusing on racial distinctions.
Comparing current numbers to those recorded a decade ago, homeownership significantly increased from 63.9% in 2012 to 65.2% in 2022, as approximately 10.5 million more homeowners found their homes. However, this number declined from 65.4% in 2021 during the throes of the COVID-19 pandemic. This was mostly influenced mostly by the challenging housing affordability and inventory conditions.
Despite mortgage rates, which have risen quickly over the last two years and are currently hovering around 7%, the black homeownership rate experienced a modest uptick to 44.1%, but remains substantially lower than other ethnic groups, including Whits, at 72.3%. Since 2012, the homeownership gap between Black and White Americans has widened from 27% to 28%.
“Minority homeownership gained ground this year, with Asian and Hispanic homeownership hitting record highs,”4 said Jessica Lautz, NAR deputy chief economist and vice president of research. “While the gains should be celebrated, the pathway into homeownership remains arduous for minority buyers.”
Asian Americans Fare Better than Other Demographics
Asian Americans (6.1 percentage points or 1.5 million households) and Hispanic Americans (5.4 percentage points or 3.2 million households) experienced the largest homeownership rate gains over the last decade. White American homeownership grew by 3.1 percentage points (65,000 households), maintaining around 70% since 2017.
“The impacts of housing affordability and limited inventory are more extreme for minority buyers, because more than half are first-time buyers who must rely on down payment sources beyond gained housing equity,” said Lautz.
As rental costs escalate, they compress renters’ disposable incomes and directly impact the capacity to accumulate savings for a home down payment. This challenge is acutely amplified among minority groups, which often face additional systemic barriers and disparities in income and wealth, further exacerbating their struggle toward achieving homeownership.
“Potential buyers of color have a harder time saving for a down payment on a home, because they are paying more of their monthly income toward rent,” explained Lautz. “Even among successful home buyers, minorities have a higher amount of student debt—the biggest expense that holds back saving, along with rent. Once they are ready to buy, Hispanic and Black Americans have a higher rate of loan denials in the mortgage market.”
Black home buyers reported the highest share of student loan debt at 41%, with a median amount of $46,000 – a record high. Twenty-nine percent of Hispanic home buyers reported having student loan debt, with a median amount of $33,300.
Hispanic and Black borrowers/buyers also encountered additional hurdles in securing mortgages. Black (26%) and Hispanic (22%) applicants experienced notably high denial rates for mortgage applications compared to their White (16%) and Asian (15%) counterparts, according to government data derived from the Home Mortgage Disclosure Act.
While Black and Hispanic applicants face greater challenges in obtaining a loan, those who manage to secure one often face less favorable terms due to higher mortgage rates than White and Asian borrowers. Among loans originated in 2022, 20% of mortgages for Black and 21% for Hispanic borrowers came with mortgage rates exceeding 6%. This contrasts with White (18%) and Asian (15%) borrowers’ mortgages having rates above this threshold. The average mortgage rates for Black and Hispanic borrowers stood at approximately 4.9%, compared to 4.8% for White and 4.6% for Asian borrowers.
Among demographic groups, White Americans made up the largest share of all home buyers at 81%, followed by Hispanic Americans (7%), Black Americans (7%), Asian Americans (6%), followed by a conglomeration of other groups (6%).
Twenty-four percent of Black, 23% of Asian and 22% of Hispanic buyers purchased multigenerational homes, compared to only 12% among White buyers. Some 26% of Asian and 14% of Hispanic buyers used a gift from a relative or friend toward their down payment for their home. Eighteen percent of Hispanic, 17% of Asian and 16% of Black buyers lived with parents, relatives or friends prior to purchasing their home, compared to only 10% of white buyers.
To read the report in its entirety, click here.
