Minority homeownership gains ground, but disparities persist: NAR

Minority buyers continue to bear the brunt of affordability issues and limited inventory

The dream of homeownership is becoming more attainable for many Americans, with 10.5 million homeowners added between 2012 and 2022. Some racial minorities also witnessed a surge in their homeownership rates.

According to a new report from the National Association of Realtors (NAR) titled “A Snapshot of Race and Home Buying in America,” Asian and Hispanic Americans achieved historic heights in homeownership rates in 2022 of 63.3% and 51.1%, respectively. But the Black homeownership rate continues to lag far behind at 44.1%. Over the past decade, the gap between Black and white homeownership widened to 28 percentage points, NAR reported. 

“Minority homeownership gained ground this year, with Asian and Hispanic homeownership hitting record highs,” Jessica Lautz, NAR deputy chief economist and vice president of research, said in a statement. “While the gains should be celebrated, the pathway into homeownership remains arduous for minority buyers.”

The overall U.S. homeownership rate increased from 63.9% in 2012 to 65.2% in 2022. But it fell slightly from 2021 (65.4%) due to higher mortgage rates and inventory constraints.

Over the past decade, Asian and Hispanic Americans experienced the largest gains in homeownership rates, while white homeownership has remained steady at about 70% since 2017.

Minority buyers, in particular, face difficulties in saving for a down payment, exacerbated by high rent prices and student loan debt. According to NAR, 41% of Black homebuyers reported having student loan debt, with the median amount of $46,000 representing a record high. Meanwhile, 29% of Hispanic homebuyers reported having student loan debt, with a median amount of $33,300.

“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,” Lautz said. “Even among successful home buyers, minorities have a higher amount of student debt, the biggest expense that holds back saving, along with rent.”

Furthermore, Black and Hispanic homebuyers encounter additional challenges in securing mortgages as they experience higher rates of denial and less favorable terms compared to their white and Asian counterparts.

According to data from the Home Mortgage Disclosure Act, 26% of Black respondents reported having a mortgage application denied, compared to 22% of Hispanic respondents, 16% of white respondents and 15% of Asian respondents. 

Additionally, 21% of loans originated in 2022 for Hispanic buyers included mortgage rates of 6% or more. This share stood at 20% for Black borrowers, 18% for white borrowers and 15% for Asian borrowers. On average, the mortgage rate for Black and Hispanic borrowers stood at 4.9%, while it hovered at 4.8% for white borrowers and 4.6% for Asian borrowers. 

Even after purchasing a home, disparities persist, with minority homeowners more likely to spend a larger portion of their income on housing compared to white homeowners.

In Colorado, for example, 41% of Black homeowners spend more than 30% of their income on housing, while only 24% of white homeowners do. In New York, 37% of Hispanic and Asian homeowners spend more than 30% of their income on housing, compared to 25% of white homeowners.

“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,” Lautz said. 

The racial snapshot report drew its data from NAR’s 2023 Profile of Home Buyers and Sellers report to shed light on the demographics of homebuyers, their motivations, the types of properties they purchase and their financial profiles.

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