How demographic changes are reshaping the for-sale housing market

Despite homeownership gains among Hispanic and Black Americans, several barriers persist.

Although affordability is proving to be a major headwind for many would-be homeowners, the demographic profile of American homeownership is shifting.

Between 2013 and 2023, Hispanic Americans experienced the biggest homeownership-rate increase among all racial groups at 5.8 percentage points, or 3.5 million additional homeowners, according to research released Monday by the National Association of Realtors. On a year-over-year basis between 2022 and 2023, Black Americans experienced the largest increase in homeownership, a gain of 0.6 percentage points, according to the NAR.

Despite that recent gain, Black homeownership still lags all other racial groups, at 44.7% compared to 72.4% among white Americans, 63.4% of Asian Americans and 51% of Hispanic Americans. On top of that, the homeownership rate gap between Black and white Americans has widened between 2013 and 2023, to 28 percentage points.

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Nadia Evangelou, senior economist and director of real estate research at the NAR, said population trends and wage growth are two key reasons why minority homeownership has grown despite recent pricing pressures related to higher mortgage rates and soaring home-price appreciation during the Covid-19 pandemic.

"Age distribution plays a significant role in homeownership trends," Evangelou said, adding Hispanic and Asian Americans overall are younger than other racial and ethnic groups.

More than half of the nation’s Black population was 38 or younger in 2019, according to a Pew Research study. Meanwhile, the median age of U.S. Hispanics in 2021 was 29.5 years old, significantly younger than that year's overall U.S. population median age of 37.8 years old, a separate Pew study found.

One in three Hispanic households are in what the NAR classifies as a key homebuying age group, between 25 and 40 years old.

Demographic groups featuring a younger or growing population are correlated with homeownership gains, as those individuals are more likely to be first-time homebuyers. Meanwhile, older populations — which typically have higher homeownership rates — tend to stabilize or sustain overall homeownership levels, according to the NAR.

Across all racial and ethnic groups, the U.S. homeownership rate was higher in 2023 — at 65.2% — than a decade ago, when it stood at 63.5%. There were approximately 11.8 million more homeowners in 2023 than there were in 2013.

Barriers remain for minority households

While racial and ethnic groups that've historically faced more significant barriers to homeownership than white Americans are more likely to be homeowners today, there remain obstacles that could stymie the homeownership-rate growth within those groups.

And while homeownership rates among Hispanic and Black households have made recent gains, individuals of those backgrounds have higher housing-cost burdens overall.

For example, across all rental households, 55% of Black Americans ages 25 to 44 spend more than 30% of their income on rent compared to 51% of Hispanic Americans, 39% of white Americans and 36% of Asian Americans in that same age range. In 46 states, Black renters face greater affordability challenges than their white counterparts, the NAR study found.

The NAR study, citing Home Mortgage Disclosure Act data, also found 21% of Black mortgage applicants and 17% of Hispanic applicants faced mortgage denials compared to 11% of white applicants and 9% of Asian applicants.

Evangelou said the main barriers to homeownership today, broadly speaking, are affordability and access to credit.

"Home prices and mortgage rates remain high, making it tougher for minority communities to break into the market," she said. "Most pay more than 30% in rent, which limits their ability to qualify for a mortgage."

If mortgage rates continue to drop, more people may be able to qualify for home loans, Evangelou said. Paired with strong wage growth, that should help improve housing affordability, she added.

When asked whether federal funding cuts across various programs — including ones targeting diversity, equity and inclusion efforts — could impact minority households' ability to gain a foothold in homeownership, Evangelou said that's still unclear.

"What we see is there’s more supply out there — that helps with affordability and leads to buyers having more choices," she said. "This can help the housing market, especially in areas that have a severe housing-supply shortage."

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