GoKawiilThe homeownership rate in the United States is reported to be 65 percent. But this commonly cited data point on homeownership is actually the owner-occupancy rate, which tells us how many housing units are occupied by an owner. While owner occupancy is an interesting measure, it doesn’t tell us how many people own their home. As an alternative to better reflect the share of adults who are homeowners, we offer the homeowners-to-population ratio, or HPOP, a measure that lends a more nuanced view for important policy considerations and context. Using this new measure, the U.S. homeownership rate is 53 percent.
To further its mission of pursuing a growing economy and stable financial system that work for all of us, the Federal Reserve Bank of Minneapolis works to understand economic conditions in the Ninth Federal Reserve District and beyond. Homeownership trends are a critical component of those conditions. Housing is both the largest expense and the largest source of wealth for many families. Using the HPOP helps us understand housing better in several ways. For example, the HPOP accounts for millions of American adults who would not be identified as either homeowners or renters under the traditional owner-occupancy measure. By including all adults, the HPOP gives us a more accurate understanding of the economic well-being of Americans. Measuring homeownership by the person instead of by the home is particularly important for comparing characteristics of homeowners: by age, by geography, and across time.
Understanding homeownership measures
To better understand the difference between the traditional owner-occupancy measure and the HPOP, consider a hypothetical cul-de-sac with five housing units, each of which is home to a separate group of residents:
Housing unit 1. A couple owns their home. The woman’s parents live with them.
Housing unit 2. A couple owns their home. Their son, a recent college graduate, lives with them.
Housing unit 3. A man owns his home. A friend lives with him.
Housing unit 4. A couple owns their home. Their two young children live with them.
Housing unit 5. Three roommates rent their home. The owner lives elsewhere.
As illustrated in Figure 1, these five housing units are home to 14 adults. Because four of these five housing units have their respective owners as residents, the owner-occupancy rate—the measure traditionally viewed as the homeownership rate—on the cul-de-sac is 80 percent. However, because only seven of the 14 adults are actually owners of the homes they live in, the HPOP is much lower, at 50 percent.
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