U.S. Homeownership Rate Lower Than Previously Thought, New Fed Research Finds

New research from the Federal Reserve Bank of Minneapolis challenges the widely accepted figure for U.S. homeownership, suggesting it is considerably lower than previously thought. The study introduces a new metric, the homeowners-to-population ratio (HPOP), which calculates the percentage of adults who own a home, rather than the share of occupied homes owned by residents.

Traditional data from the U.S. Census Bureau measures owner-occupied housing units. This method can create an inflated perception of homeownership because it classifies a household as owner-occupied even if only one resident owns the property, while others, such as adult children living with parents, do not. The Minneapolis Fed's research indicates that approximately 14% of U.S. adults reside in owner-occupied homes without actually owning the property themselves.

Consequently, the HPOP reveals that only about 53% of U.S. adults are homeowners, a stark contrast to the commonly cited rate of around 65%. Erik Hembre, a senior economist at the Minneapolis Fed and co-author of the report, stated, "We should be in agreement about what it is we're talking about, and when you hear that the homeownership rate is about two-thirds of Americans, you take that to mean two-thirds of adults are homeowners, which is factually not true."

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We should be in agreement about what it is we're talking about, and when you hear that the homeownership rate is about two-thirds of Americans, you take that to mean two-thirds of adults are homeowners, which is factually not true.

This new measure has significant implications for policy design, as inaccurate data can lead to flawed strategies. Francesco D'Acunto, a professor of real estate at Georgetown University, noted that the HPOP underscores the increasing difficulty of achieving homeownership in the U.S. "It's a signal of the fact that homeownership is becoming less affordable in the U.S., which we knew in general, but the strength of this phenomenon is more accentuated by the new measure," he told CBS News. "It tells us the problem is even worse than we knew."

The HPOP data shows lower homeownership rates across all U.S. states compared to previous estimates. States with high housing costs, such as California and New York, exhibit the most significant discrepancies between the traditional measure and the HPOP.

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It's a signal of the fact that homeownership is becoming less affordable in the U.S., which we knew in general, but the strength of this phenomenon is more accentuated by the new measure. It tells us the problem is even worse than we knew.