The homeownership rate isn’t what you think

Adult children who live at home don’t get added onto their parents’ mortgage or deed. But that’s how they’re often treated when we rely on the most commonly reported measure of homeownership. We’re proposing an alternative that shines a light on millions of Americans routinely glossed over in the nation’s homeownership conversation.

The homeownership rate in the United States is commonly reported to be 65%. But this is actually the “owner-occupancy rate.” It tells us how many housing units are occupied by an owner. That measure has its uses, but doesn’t actually tell us how many adults own a home. To better reflect the share of adults who are homeowners, we offer the “homeowners-to-population ratio,” or the “HPOP.” Using this new measure, the U.S. homeownership rate is 53%.

To calculate the HPOP, first we count the number of homeowners by adding up the number of adults identified as the head of an owner-occupied household as well as any spouses or unmarried partners who live with them. Then we divide that number by the total adult population. i.e., people ages 18 and over.  

What are the strengths of this approach? Here are a few.

It focuses on people instead of houses

We developed this metric as part of our work to better understand economic conditions, which include homeownership. The HPOP categorizes adults more precisely than the owner-occupancy rate because many adults who live with homeowners aren’t accurately captured by the standard “renter” or “homeowner” category. 

We found that 13.9% of adults in the United States live in owner-occupied homes but are likely not owners themselves, even though the owner-occupancy rate would count them as such. In other words, about one in seven of the nation’s adults are misrepresented in the most-cited statistic on homeownership. 

They could be older parents living with their homeowning adult children; other relatives, such as siblings or cousins; or other unrelated adults, such as friends or roommates. Many likely are contributing in some way to the household’s finances, like the adult child who is buying the household groceries, but are not considered “renters” under the formal definition used for measurement.

Calculations of the owner-occupancy rate also leave out people who are living in group quarters such as college dormitories, nursing homes and correctional facilities. Our calculations of the HPOP include those groups, who make up about 3% of the difference in who owns a home between the two approaches.

It offers better demographic information

The HPOP can better measure homeownership statistics for specific demographic groups. This is primarily because the HPOP includes the individual characteristics of all adults, while owner-occupancy will only use the characteristics of the “head of household.” 

For example, the owner-occupancy rate for households headed by adults under age 35 was 37% in 2024. Using the HPOP, which accounts for the full range of adult living situations, we find a substantially lower number: Only 22% of adults under 35 own their homes. This large drop is primarily because as many adults under 35 live with their homeowning parents as are homeowners themselves.

Switching from the owner-occupancy rate to the HPOP also captures changes in the way people live over time. For example, the HPOP for adults over 70 climbed upward as more older adults chose to age in place. Their HPOP increased by 5 percentage points in total from 2006-2024. In contrast, the owner-occupancy rate among older adults increased by just 1 percentage point. 

It surfaces new state-level insights

Finally, the HPOP paints a different picture of how homeownership varies among states. Every state has a lower HPOP rate than its owner-occupancy rate. But the change tends to be bigger in places where housing is more expensive relative to local incomes. The inverse relationship between housing prices and homeownership may be stronger than the owner-occupancy rate suggests.  

For example, in California and Utah, states with high home prices, the HPOP is almost 15 percentage points below the owner-occupancy rate. Meanwhile, in states with low housing costs, such as North and South Dakota, the HPOP is less than 6 percentage points lower than owner-occupancy.

The right measure for more policy conversations

The traditional occupancy-based homeownership rate is helpful in certain cases. For example, it tells us about how housing stock is being used. And a government may need to know what share of its housing is owner-occupied for policy considerations related to property taxes. While using the HPOP recognizes that fewer adults own homes than we may have thought and changes our understanding of homeownership for some subgroups, it is important to note that it does not greatly alter our understanding of nationwide trends. For example, compared to 2006, just prior to the housing crash, both the HPOP and owner-occupancy rates for the United States have declined by 2 percentage points.

But we’d suggest the HPOP provides a person-centered homeownership measure better suited to most policy conversations. Instead of relying on the statistic that two-thirds of homes are owner-occupied, we can instead show that about one-half of adults own their home. 

Erik Hembre and Benjamin Horowitz work for the Community Development and Engagement Division at the Federal Reserve Bank of Minneapolis. The views expressed do not represent those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: [email protected].