Not everyone has benefited equally from the pandemic-era housing boom—the gap between Black and White homeownership rates grew to its widest in a decade in the first two years since COVID-19 hit.
That’s according to a report by the National Association of Realtors released Thursday, which showed that homeownership among all races increased between 2019 and 2021, while homebuying by Black households lagged behind. The homeownership rate for White households rose to 72.7% from 69.8%, while Black homeownership rose to 44% from 42%, making for the widest homeownership gap since at least 2011, according to the NAR, which analyzed census data. The researchers downplayed statistics from 2020, which was affected by data collection problems amid the pandemic.
“The American dream of home homeownership has not been dampened by the pandemic, but the Black homeownership rate has not kept pace with increases in the other racial and ethnic groups, making even larger the gap between the White and Black homeownership rate,” said Nadia Evangelou, senior economist and director of real estate research at the NAR.
The report highlights the increasingly unaffordable housing market is especially hard for Black families to break into. NAR economists pointed to several factors holding the Black homeownership rate nearly 29 percentage points below White households: lower average income, a lower marriage rate, and a greater likelihood of being first-time buyers.
Among Black renters—the group of people most likely to move into homeownership—the average income was $32,600, compared with $45,310 for White renters, according to the NAR data. Black households were also more likely to be severely “cost-burdened” by rent that took up more than half of their income, with 30% of Black renters falling into that category compared with 22% of White ones. Overall, only 9% of Black renters could afford the median-priced home in 2021, versus 17% of White renters.
A lower marriage rate also hinders Black homebuyers, Evangelou said. The data shows 46% of Black households consist of a married couple, versus 60% of White households.
“Married households typically have higher household incomes, and more financial assets,” she said.
Black homebuyers are also held back by a financial Catch-22 in the form of their lower rate of home ownership. People who own houses already have an easier time buying because of the equity they’ve built up—especially important in the hot pandemic-era housing market, which saw prices rise 45% between February 2020 and the peak of prices in June 2022, according to the S&P CoreLogic Case-Shiller Home Price Index.
“Unfortunately, the incredible affordability challenges of the last year have hit minority home buyers more than White buyers,” said Jessica Lautz, NAR deputy chief economist and vice president of research, in a press release. “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.”
One cause of the persistent racial homeownership gap not mentioned in the report—the NAR itself, a trade group that represents real estate professionals. In the mid-20th century, NAR members discriminated against Black homebuyers by engaging in redlining—denying financial services to residents of minority neighborhoods; promoting restrictive covenants in developments that blocked the sale of homes to Black buyers; and lobbying against fair housing laws that prohibited racial discrimination. In 2020, the NAR apologized for its history of promoting segregation.
The NAR report covers 2021, when the average rate offered for a 30-year mortgage hit an all-time low of 2.65%, according to data from Freddie Mac. The affordability barriers to Black homeownership only got higher in 2022, as mortgage rates more than doubled—they’re now at 6.65%.
“I expect that Black homeownership will continue, unfortunately, to lag behind,” Evangelou said.