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Market reports, forecast data, industry insights, and more from iEmergent.
Black History Month, observed every February, honors Black Americans’ significant achievements, contributions, and enduring legacy. Established in 1926 as a weeklong observance by historian Carter G. Woodson, it was expanded to a monthlong celebration in 1976. Black History Month serves as both a reflection on the past and a call to action to address systemic barriers to equality that persist to this day.
Homeownership has long been a cornerstone of the American Dream, providing a pathway to wealth, stability, and community development. However, for Black Americans, this path has been hindered by systemic obstacles including redlining, discriminatory lending practices, and inequitable access to resources. Despite these challenges, the Black community has demonstrated resilience. Understanding the current landscape of Black homeownership requires a closer look at demographic shifts and lending trends that continue to shape the market.
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Recent Census data shows that Black households—individuals or groups of people living together in the same housing unit, whether owned or rented—are steadily increasing. In 2023, approximately 48.3 million people identified as Black, a 33% increase from 36.2 million in 2000. This demographic expansion has led to a corresponding rise in Black households, now about 15.5 million, representing 12.2% of all U.S. households.
However, this household growth has not resulted in a corresponding increase in homeownership. Black homeownership rates and lending to Black households remain stagnant, underscoring the persistent barriers preventing Black Americans from achieving homeownership at the same rate as other demographics.
Here we’ll explore lending trends, the homeownership gap, factors contributing to the disparity, and the role lenders play in getting Black households into homes.
iEmergent’s mortgage forecasts show Black home purchase activity growing at about the same pace as all other homebuying segments: slowly but steadily since 2023.
Yet despite the growing number of BIPOC households in the U.S., the penetration rate for diverse borrowers lags behind that of Non-Hispanic White borrowers (whom we’ll call white borrowers from here on).
In 2023, white borrowers accounted for 70% of U.S. mortgage purchase loans, while just 8% of loans went to Black borrowers—despite Black households comprising 12.2% of all U.S. households. This disparity has remained stubbornly unchanged.
While refinance activity remains subdued compared to historical highs, the potential for future growth in refi is significant as interest rates improve, the number of Black homeowners increases, and more Black households reach higher income levels.
Examining historical and forecast refi origination data once again shows that dollar volume and loan units to Black borrowers have been trending in the same direction as the overall market:
Yet once again, the share of loans to Black borrowers is lower than one would expect given the share of Black households. As long as the proportion of loans of all purposes to Black borrowers remains stubbornly flat, the racial homeownership gap stays where it is.
The homeownership rate for Black households in the United States is 43.3%, lagging more than 20 points behind the overall homeownership rate of 64.9%.
Alarmingly, the gap is even wider today than it was when fair housing laws were enacted in 1968, according to the Urban Institute’s The Future of Headship and Homeownership report.
Challenges to achieving equitable homeownership opportunities for Black Americans span this country’s entire history. The disparity in homeownership rates is rooted in historical practices like redlining and discriminatory lending policies. And the gap is an amalgamation of many factors from deeply ingrained systemic racial disparities and income inequality to mortgage denials and systemic lending challenges.
Income disparities between Black and white Americans remain a significant factor in the homeownership gap, but they are not the sole explanation. A substantial share of Black households earn less than $75,000 annually, but the middle- and upper-income segments are expanding. According to the latest Census data, more than 3.5 million Black households now earn over $100,000, signaling a growing segment of higher-income borrowers.
Some housing professionals attribute the homeownership gap solely to these income disparities, but the reality is more complex. Enduring discrimination has had long-term consequences on wealth accumulation in Black communities, and factors beyond income continue to affect Black homeownership rates.
Income disparity is absolutely still an issue, but it is nowhere near the only factor to blame for the homeownership gap.
Black households want to buy homes. In fact, the rate of applications by Black households has increased from 6.3% of total applications in 2020 to 9.6% in 2023. However, Black applicants continue to face disproportionately high mortgage denial rates. In 2023, the denial rate for Black applicants (18.6%) was nearly double that of white applicants (9.6%). And Black applicants have the highest rate of overall application fallout—a term that encompasses denials as well as other reasons applications fail to turn into closed loans—of any population segment.
These rates are not on the downtrend. Fallout rates for Black applicants have only gotten worse over the last five years:
These denials aren’t limited to low-income applicants. Higher-income Black applicants experience rejection rates similar to those of low-income white applicants, proving that income disparity is not the only explanation for these trends.
While the overall U.S. fallout rate for Black applicants was 43.3% in 2023, select metro areas saw more than half of Black applicants falling out of the mortgage process:
Black applicants are being denied for a variety of reasons. Credit history and debt-to-income (DTI) ratio are the leading reasons for mortgage denials across all demographic groups, but the impact is especially severe for Black borrowers. Black applicants are rated lower in these areas thanks to historic inequities that have prevented this group from building generational wealth, further reinforcing systemic barriers to homeownership.
Research shows that credit score disparities between demographic segments start early. The Urban Institute reports that between ages 25 and 29, young adults in majority-Black communities have a median credit score nearly 100 points lower than their counterparts in majority-white communities. The mortgage industry has recently added new criteria to supplement ability-to-pay evaluation, but Black applicants are still at an inherent disadvantage under the credit history umbrella.
DTI impacts applicants across the board, but Black applicants are more severely affected by predatory lending practices, like higher interest rates, that lead to a cycle of debt. In an effort to better their station in life, many Black applicants carry student loans that increase their DTI and limit their ability to save. These conditions are cyclical. Without generational wealth, Black households are less able to save for education and homeownership, which are cornerstones of generational wealth.
National-level data is useful for identifying big-picture patterns, trends, and homeownership gaps between borrower segments. However, the sizes of these gaps vary from market to market, as do the most effective strategies for closing them.
The Black homeownership gap is especially pronounced in urban population centers. All of the top 100 U.S. metropolitan statistical areas (MSAs) by population have large homeownership gaps between Black households and the overall population. Even in the MSAs with the smallest homeownership gaps, there are still at least 18 percentage points between the overall homeownership rate and the rate of homeownership for Black households.
The MSAs with the widest homeownership gaps tend to feature low BIPOC populations in addition to low Black homeownership rates:
In some smaller MSAs, a majority of lenders are not originating loans to Black borrowers at all. While these areas have smaller BIPOC populations, the disparity is striking. In the Boise City, ID, MSA, 87% of lenders did not issue a single loan to a Black borrower, compared to just 5% that issued no loans to white borrowers. This underscores the systemic nature of the Black homeownership gap, which persists at both the local and lender levels.
Black borrowers continue to face higher denial rates, greater reliance on high-cost loans, and higher barriers to accessing homeownership. These factors not only limit home purchase opportunities but also reduce the long-term wealth-building potential that comes with homeownership, underscoring the need for targeted policy interventions and industry action to expand access to affordable mortgage credit, address lending disparities, and create more equitable pathways to homeownership. The following section explores strategies for implementing these initiatives effectively.
With Black households expected to make up a growing share of new homeowners in the coming decades, mortgage lenders have a clear opportunity to serve this expanding market. By investing in technology that streamlines the mortgage process, building relationships with trusted community leaders, and offering products tailored to Black homebuyers, lenders can position themselves for long-term growth.
Some lenders hesitate to adopt strategies that close the homeownership gap, viewing lending to Black borrowers as an act of charity rather than a business opportunity. This perception ignores the data. Black households are increasing in number, incomes are rising, and mortgage applications are growing. Purposeful engagement with Black borrowers isn’t just a social good—it’s a competitive necessity. Extending credit to new borrowers is how lenders sustain and expand their market presence.
Here are some specific strategies lenders can implement to support Black homeownership:
Having access to the right data is the best way to understand and capture the opportunities in any individual market. In which neighborhoods are Black homeowners buying homes? Which real estate partners work most with Black homeowners? How can we best support Black communities on the path toward homeownership? Using iEmergent’s data and tools, lenders can:
While systemic changes are necessary to address historical inequities, many solutions begin at the local level. Lenders that leverage market-specific data can better understand the unique challenges and opportunities in different communities and the types of programs and products that would most help local Black households.
Lenders worried about program uptake can look at the data. The trend is clear: Black households are eager to use programs available to them.
According to the new Equity Certified program offered by the Homeownership Council of America, the number of lenders with SPCPs has increased rapidly over the past four years. Many of these lenders report resounding success—especially those with programs driven by comprehensive, local-market-driven insight like that provided by iEmergent and written and developed by SPCP experts at The Homeownership Council of America.
In addition to targeted lending products and programs like SPCPs, local partnerships with community organizations still remain extremely important to bridging gaps in financial literacy and resource accessibility. Comprehensive, multi-sector initiatives like the CONVERGENCE Collaboratives in Columbus, Memphis, and Philadelphia, as well as the Black Home Initiative in Seattle build outreach and education programs that provide Black communities with the knowledge and tools to begin the homebuyer journey and navigate the mortgage application process successfully.
Black households are ready and willing to become homeowners. While there are large, systemic changes that need to happen, lenders can take up the helm in their communities and do what they can to shrink the homeownership gap.
While lenders have the power to help increase credit access to Black households, closing the homeownership gap is not entirely on the shoulders of individual lenders. There are systemic factors that, while they shouldn’t prevent lenders from doing what they can, are important to understand.
Rising home prices and interest rates have made affordability a pressing concern for many prospective Black homeowners. In 2023, the 30-year mortgage rate peaked at 7.79% before settling above 7% in early 2024, adding further strain to an already challenging housing market. Meanwhile, home prices remain 47% above pre-pandemic levels, pushing homeownership further out of reach for many Black buyers.
The Harvard Joint Center for Housing Studies estimates that a 3.5% down payment on the median-priced home ($389,400) in early 2024 required $25,300 in cash, an amount that many Black households—who typically have lower accumulated wealth—struggle to save.
When a household’s housing costs are more than 30% of their income, it is considered cost burdened. About half of renters in the U.S. are cost burdened with an unsurprising disparity between white renter households (46.7%) and Black renter households (56.2%). This burden makes it next to impossible to save for a down payment, especially when we consider that only 14.5% of renter households had the income necessary to afford a median-priced home.
Existing housing costs are financial hurdles that disproportionately impact Black households, making it harder to transition from renting to homeownership and widening the racial wealth gap.
Homes in predominantly Black neighborhoods are often undervalued, limiting opportunities for equity growth and contributing to the racial wealth gap. NAREB’s Home Appraisals in Black and White study found that homes in Black neighborhoods are systematically appraised at lower values than comparable homes in white neighborhoods—a disparity that remains even after accounting for location, housing quality, and socioeconomic factors. In 2023, the median appraisal gap was 30%, with homes in Black neighborhoods appraised at $131,343 less than similar homes in white neighborhoods ($430,915). Lower valuations not only restrict Black homeowners’ ability to build wealth but also make it more difficult to refinance, secure home equity loans, or sell at fair market prices.
Generational wealth, or the lack thereof, plays a significant role in homeownership disparities. Black families often lack the inherited wealth available to many white families, which makes it harder to accumulate a down payment or navigate unexpected homeownership costs. Research indicates that student loan debt also disproportionately impacts Black borrowers, further exacerbating financial challenges.
Black borrowers are disproportionately burdened by student loan debt, which significantly impacts mortgage qualification. Research from the Brookings Institution found that Black graduates, on average, owe $25,000 more in student loans than their white counterparts. The Urban Institute reports that Black borrowers also experience higher student loan delinquency rates, which negatively impact credit scores and mortgage approval rates. And according to the National Center for Education Statistics, 20 years after graduation, Black student borrowers owe an average of 96% of the loan balance, while similar white borrowers owe only 6%. The end result? 46% of all Black student borrowers report putting off buying a home on account of high levels of student debt.
The increased debt burden of student loans contributes to higher DTI ratios, a leading cause of mortgage denials, particularly for Black applicants. Student loan debt remains a key financial hurdle, limiting access to homeownership and wealth-building opportunities.
As we celebrate Black History Month, we recognize both the historical significance and future potential of Black homeownership in the United States. By understanding the unique challenges Black households face and actively working to address these barriers, lenders can play a crucial role in advancing housing equity.
The Black lending market is poised for growth. Realizing this growth potential requires concerted, data-driven efforts to ensure that more Black Americans have access to the opportunities and benefits of homeownership. This month and beyond, let us commit to actions that honor the past while building a more inclusive future.