Homeownership gaps are finally narrowing but not because barriers have disappeared. Homeownership is still unattainable for many households thanks to high prices, high interest rates, and broader affordability challenges.
But data show the racial homeownership gap shrank between 2019 and 2024 as households of color entered homeownership at a faster rate than white households, partly because most white households are already homeowners and partly because younger generations are becoming increasingly diverse, increasing the share of first-time homebuyers who are households of color. Gains among Black households have been particularly notable, as they experienced the largest decline in homeownership following the Great Recession and the slowest recovery in the years that followed.
At the same time, persistent differences by race, ethnicity, and income continue to limit equal access to wealth-building opportunities—opportunities that make owning a home more accessible.
During this National Homeownership Month, we explore new 2025 Home Mortgage Disclosure Act (HMDA) data that reveal three trends that highlight these barriers and identify opportunities for policy and research to make homeownership more accessible and sustainable for everyone.
1. Unaffordability is limiting access to homeownership
The effects of elevated mortgage rates and high home prices on prospective homebuyers are evident across the mortgage market. Home purchase mortgage originations increased 18.1 percent, from 3.6 million to 4.3 million loans, between 2019 and 2021. But originations fell sharply as mortgage rates increased, declining to 2.8 million loans in 2025—35 percent below the 2021 peak.
Home purchase mortgage originations to Black borrowers increased 30 percent between 2019 and 2021 but declined 40.5 percent between 2021 and 2025, the largest decline among major racial and ethnic groups. Meanwhile, mortgage originations to Hispanic borrowers increased 27.5 percent between 2019 and 2021 and declined 23.6 percent thereafter. Although substantial, this decline was smaller than for other groups (e.g., originations to white and Asian borrowers declined 36.4 and 36.7 percent during the same period), suggesting Hispanic households remained comparatively active in the homebuying market despite worsening affordability conditions.
Mortgage lending fell particularly sharply between 2021 and 2022 as mortgage interest rates rose rapidly. Although purchase lending has stabilized since 2023, mortgage originations remain well below the levels observed during the low-interest-rate environment of 2020 and 2021.
2. Mortgage denial rates remain elevated for borrowers of color
Mortgage denial rates remain higher than in 2021, when mortgage rates were near historic lows. Black borrowers consistently experienced the highest denial rates, reaching 18.2 percent in 2025. White borrowers experienced the lowest and the least volatile denial rates, at 6.9 percent in both 2021 and 2025. Asian and Hispanic borrowers experienced similar post-2021 increases in denial rates, though their levels remained below those of Black borrowers.
The combination of lower mortgage origination volumes and higher denial rates suggests that elevated interest rates and affordability pressures have disproportionately affected many prospective homebuyers of color. Had financing conditions remained more favorable, homeownership gains among these groups may have been even larger.
3. The lowest-income households face greater barriers to homeownership
As mortgage interest rates increased, debt-to-income (DTI) ratios became the most common reason for mortgage denial. In 2025, approximately 43 percent of denied home purchase applications cited excessive DTI ratios as a contributing factor. DTI-related denials were more prevalent among borrowers of color than among white borrowers.
To offset higher monthly mortgage payments, borrowers have increasingly relied on larger down payments. The share of homebuyers putting at least 20 percent down increased from 24.2 percent in 2020 to 27.2 percent in 2021 and has remained above 30 percent since 2022. This trend holds across all racial and ethnic groups, though white and Asian homebuyers—who are more likely to receive financial support from family—are most likely to put down 20 percent.
Between 2019 and 2022, both the real average income and the median income increased for all racial and ethnic groups. The actual number varies by race and ethnicity, with Black and Hispanic homebuyers having lower incomes and Asian and white homebuyers having higher incomes, but the growth rate was relatively consistent across groups, with real median income increasing 12 to 16 percent and the real average income increasing 28 to 31 percent. This suggests that recent homebuyers increasingly represent households with stronger financial resources, higher earnings, and greater accumulated wealth, reflecting the growing financial barriers to homeownership in an environment of rising home prices and mortgage rates.
Strategies to make homeownership more accessible and sustainable
Recent years show that meaningful progress in reducing racial homeownership disparities is possible, even amid rapid increases in home prices and mortgage rates. Yet the HMDA data also make clear that affordability challenges continue to limit access to homeownership, particularly for low-income households and many borrowers of color.
Recent federal policy changes may further complicate efforts to expand access to homeownership. Earlier this year, the Federal Housing Finance Agency revised the affordable housing goals for Fannie Mae and Freddie Mac, lowering targets for loans serving low-income and very low-income borrowers and eliminating goals tied to majority-minority neighborhoods. Though these goals are not binding and historically have not always been met, weakening them could reduce incentives to prioritize lending and secondary-market support for traditionally underserved borrowers and communities—core elements of the government-sponsored enterprises’ mission (PDF).
A comprehensive approach to housing affordability remains critical. The government-sponsored enterprises and the Federal Housing Administration have the capacity to continue supporting sustainable access to mortgage credit for creditworthy borrowers, such as by incorporating on-time rental payments in mortgage underwriting, streamlining down payment mortgage options (including zero–down payment programs), and improving the loss mitigation waterfall that could safely increase the credit box.
At the same time, expanding homeownership requires increasing the supply of homes available for purchase, particularly starter homes affordable to first-time homebuyers. Congress just passed the major the 21st Century ROAD to Housing Act, which includes several reforms intended to boost housing production, expand factory-built housing, and encourage low-balance mortgages.
We also need more research. Although homeownership gains were greatest among households of color, today’s affordability challenges may be causing people to double up with family members or roommates—or even delay forming independent households altogether. As a result, the homeownership rate data, which is calculated at the household level, may not fully capture persistent barriers to housing access and economic mobility. Further research should examine trends in household formation, living arrangements, and housing cost burdens to provide a more complete picture of how rising housing costs are shaping housing outcomes beyond homeownership. This more complete picture would show whether recent homeownership gains reflect broader improvements or are masking challenges for households still on the sidelines of the housing market.
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