Asian, Hispanic Ownership Surges, But Blacks Lag Behind

Though Americans are more likely to own a home today than 10 years ago, racial gaps persist, a new NAR report shows.

Asian Americans and Hispanics experienced the largest homeownership rate gains of any race in the last decade, but Black Americans continued to lag far behind, according to the National Association of REALTORS®’ 2023 Snapshot of Race and Home Buying in America. In that time period, the homeownership rate for Black Americans rose only 0.4% and remains below 45%, while the rate for Hispanics and Asian Americans surged to 50% and 60%, respectively. The homeownership rate for White Americans has consistently hovered near 70% since 2017.

Research has long tied homeownership to multiple economic and social benefits, such as higher educational performance in children, better health care outcomes and lower community crime rates. Black Americans are losing out on these benefits disproportionately as the homeownership gap between Black and White Americans grows larger, NAR’s report finds.

Overall, homeowners have accumulated more than $200,000 in housing wealth over the last decade, but fewer Black Americans are reaping those rewards than members of any other race. For example, the net worth of a typical White household is nearly eight times that of a Black household as of 2019, the report finds. Because homeownership is largely attributed to generational wealth, this means Black families have accumulated less wealth to hand down to future generations than families of any other race.

NAR's 2023 Snapshot of Race and Home Buying in America

“Unfortunately, the incredible affordability challenges of the last year have hit home buyers [of different ethnic and racial backgrounds] more than White buyers,” says Jessica Lautz, NAR’s deputy chief economist and vice president of research. “Black buyers are more likely to be first-time buyers, who are more sensitive to changes in mortgage interest rates, while White buyers are more likely to have housing equity to rely on as they make a housing trade.”

Black Renters Are ‘Cost-Burdened’

Rents have risen dramatically in recent years, keeping the possibility of homeownership out of reach for more households. Fifty-four percent of Black renters spend more than 30% of their income on rent—the threshold at which households become cost-burdened, experts say. About 30% of Black renters spend 50% or more of their income on rent, according to NAR’s report.

“The main reason that Black renter households are more cost-burdened is that although they have a lower income than White renters, their monthly rent isn’t significantly lower,” the report says. In 2021, the median income of Black renters was $32,600 compared to $45,310 for White renters.

Further, more than 60% of Black renters in expensive markets like Hawaii, Vermont, California, Nevada and Florida are cost-burdened. “While rental costs are expected to rise even further in 2023, it will be even more difficult for Black renter households to save for a down payment for a home purchase,” the report says.

Where Homeownership Opportunities Exist

In some areas of the country, renters may be more financially prepared to step into homeownership. The NAR report highlights where renters may be most able to afford a typical home, assuming they have a mortgage rate near the current average of 6.5%. Nationally, 17% of White renters can afford to buy a median-priced home while only 9% of Black renters can. “Thus, the homeownership gap between White and Black households will continue to persist,” the report says. “However, with more than 30% of Black renters earning the qualifying income, Alaska, West Virginia and South Dakota may see an uptick in the Black homeownership rate.”

“Even among successful home buyers, Black Americans have lower household incomes, which narrows the available pool of inventory they may be able to afford and makes their journey into homeownership even more difficult in this limited housing inventory environment,” Lautz says.

Below are charts, broken down by race, of the percentage of renters who could afford homeownership.

Black Renter Households That Can Afford to Buy the Typical Home

  • Highest ownership possibilities: Alaska (36%), West Virginia (35%) and South Dakota (32%)
  • Lowest ownership possibilities: Hawaii (2%), Idaho (2%), and Wyoming (2%)
NAR's 2023 Snapshot of Race and Home Buying in America

Asian Renter Households That Can Afford to Buy the Typical Home

  • Highest ownership possibilities: North Dakota (63%), Kentucky (60%) and Ohio (59%)
  • Lowest ownership possibilities: Hawaii (5%), District of Columbia (11%) and California (14%)
NAR's 2023 Snapshot of Race and Home Buying in America

Hispanic Renter Households That Can Afford to Buy the Typical Home

  • Highest ownership possibilities: Maine (54%), Oklahoma (46%) and West Virginia (45%)
  • Lowest ownership possibilities: California (3%), Hawaii (4%) and Colorado (5%)
NAR's 2023 Snapshot of Race and Home Buying in America

White Renter Households That Can Afford to Buy the Typical Home

  • Highest ownership possibilities: Mississippi (42%), Alabama (38%) and Arkansas (38%)
  • Lowest ownership possibilities: Hawaii (6%), Utah (9%) and Idaho (10%)
NAR's 2023 Snapshot of Race and Home Buying in America

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