New homeownership measure puts people first

The 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.

Calculating the HPOP

To calculate the HPOP, we divide the total population of adult homeowners by the total adult population. For this analysis, we use data from the U.S. Census Bureau’s American Community Survey (ACS).¹ To determine the total population of adults, we exclude anyone under age 18. To identify homeowners, we then look among the adults living in owner-occupied housing. The ACS tags the homeowner within such homes as the “reference person” (or “head”) for their household. We then also include any spouses or unmarried partners of the reference person as homeowners.²

The HPOP categorizes adults who are not homeowners more precisely than the owner-occupancy rate. The largest group of non-homeowners, renters, is accounted for in both measures. However, calculations of the owner-occupancy rate 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 and also account for discrepancies in the number of adults in renter households relative to homeowner households. For instance, if 50 out of 100 homes were rented by 50 adults living alone and the other 50 homes were owned and occupied by 100 adults living as married couples, then the owner-occupancy rate would be 50 percent but the HPOP would be 67 percent.

Our approach also quantifies that 13.9 percent of adults in the United States live in owner-occupied homes but are not owners themselves. In other words, more than one in eight of the nation’s adults are misrepresented in the most-cited statistic on homeownership. As Figure 2 indicates, these adults include adult children living with their homeowning parents; older parents living with their homeowning adult children; other relatives, such as siblings or cousins; and other unrelated adults, such as friends or roommates.

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New measure highlights reductions in numbers of young homeowners

Policymakers are often interested in homeownership rates for specific population groups. Homeownership’s role in wealth building and financial independence has led to interest in the Gen Z and Millennial generations’ homeownership rates. For example, one recent survey garnered a lot of attention when it put the median age of a first-time home buyer at 40 years old (though several other data sources suggest the median first-time home buyer’s age is actually in the early 30s).

The HPOP categorizes adults who are not homeowners more precisely than the owner-occupancy rate.

Since the owner-occupancy rate is defined at the housing-unit level, descriptions of owner-occupancy rates by demographic characteristics, such as age, race, or sex, can be misleading. In the owner-occupancy approach, one homeowner or renter is defined as the head of a household. That person’s demographic characteristics are then used to represent all the residents. An advantage of the HPOP is that since it’s defined using all the adult residents, it can more accurately describe homeownership by demographic characteristic. These differences become clear when we look at homeownership rates by age.

Across both the owner-occupancy rate and the HPOP, young people have low homeownership rates. Even so, the owner-occupancy rate inflates homeownership among young adults, in two ways. First, as noted above, owner-occupancy rates by age are defined by the age of the household head. Because only a third of adults under age 35 are household heads,³ many young adults are not reflected in the rate calculation. This includes students or young workers who choose to reside at home with their parents until they’ve saved up some money or increased their earnings. Second, the owner-occupancy approach fails to account for anyone living in college dorms. They’re excluded from the calculation because dorms are categorized as group quarters.

Since the HPOP is defined using all adult residents, it can more accurately describe homeownership by demographic characteristic.

The owner-occupancy rate for households headed by adults under age 35 was 37 percent in 2024. Using the HPOP, which accounts for co-residents and dorm dwellers, we find a substantially lower number: only 22 percent of adults under 35 own their homes.

Switching from the owner-occupancy rate to the HPOP also highlights how homeownership rates by age have evolved over time. Our HPOP approach indicates that the data from the past two decades have at least two stories to tell. First, young people’s homeownership rate fell and then rose. From 2006 until 2015, the HPOP among younger Americans dropped. For example, the HPOP for a 25-year-old fell from 20 percent in 2006 to 12 percent in 2015. It then increased from 2015 to 2024. As shown in Figure 3, in 2024 14 percent of 25-year-olds owned their homes. Second, the HPOP among adults over age 70 climbed upward during both periods, increasing by 5 percentage points in total. This could be the result of increased longevity and financial security among this group. In contrast, if we use owner-occupancy as our measure, we find only a 1 percentage point increase—a finding that largely misses the homeownership rate trend among older adults over this period. One reason the findings are different might be that many older adults would have either been co-residing with their children or living in nursing homes and thus not captured by the owner-occupancy measure.

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Implications at the state level

In addition to shedding light on differences in homeownership by demographics, the HPOP paints a significantly different picture of how homeownership varies among states. In doing so, it presents a stronger relationship between housing prices and homeownership than the owner-occupancy rate does. Our analysis shows that every state has a lower HPOP than owner-occupancy rate. In Figure 4, the y-axis values of the gold dots represent the differences between the two measures for all 50 states. We find that states with higher housing costs tend to have even lower HPOPs relative to their owner-occupancy rates. To measure housing prices, we use the rent-to-income ratio, which is the average annual rent divided by the average personal income among adult renters. Rent is generally a more consistent measure of housing prices, since the typical cost of owning a home can vary as mortgage rates and other homeownership costs shift over time. Comparing rents to incomes allows us to factor in state-by-state differences in typical wages. The higher the rent-to-income ratio, the higher a state’s housing costs.

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Why would the difference between the two homeownership measures be so closely tied to housing costs? The most obvious explanation is that in places where housing is cheaper, more adults are buying their own homes. Of course, monthly expenses are only one factor people consider when they are deciding how—and with whom—they’d like to live. Housing situations might change when people get married. Some adults might want to take care of their aging parents or give their adult children a more affordable place to live. Some homeowners might prefer living with other people, leading them to rent out a spare room instead of using it as a guest room or an office.

As higher housing costs motivate more adults to live together, the difference between the owner-occupancy rate and the HPOP grows.

Personal preferences influence some of these decisions. But economic conditions, such as the price of housing, are another influence. For example, the more expensive it is to rent or own a home, the more appealing it is to split those costs with others. As higher housing costs motivate more adults to live together, the difference between the owner-occupancy rate and the HPOP grows.

Figure 5 allows users to see precisely how large the difference is between the two homeownership measures for each state. It also displays the ranking change that occurs when shifting from the owner-occupancy rate to the HPOP. 

To continue our examination of housing costs and homeownership, consider the implications for two states: Hawaii and North Dakota. Hawaii, which appears as the topmost gold circle back in Figure 4, is nearly the least affordable state, as measured by its rent-to-income ratio of 0.57. Consistent with the idea that higher housing costs might discourage adults from forming their own households, Hawaii’s HPOP is 18.9 percentage points lower than its owner-occupancy rate, the largest difference of any state.

On the other hand, North Dakota—one of four states that lie wholly within the Ninth Federal Reserve District, which the Minneapolis Fed serves—is the most affordable state in the nation by rent-to-income ratio. As we might expect, it has the smallest difference between its owner-occupancy rate and its HPOP. This small difference reflects, for example, how few adults under age 35 co-reside with parents in North Dakota. Only 10 percent of North Dakota’s young adults live with a parent, compared to the national average of 30 percent. While the gap between the two homeownership measures is more than 10 percentage points for the majority of states, in North Dakota the difference is just 3.9 percentage points. As a result, North Dakota’s homeownership ranking among the 50 states rises from forty-seventh to twenty-fourth when using the HPOP instead of the owner-occupancy rate.

Minnesota, South Dakota, and Montana—the other three states that lie wholly within the Ninth District—are relatively affordable places, as measured by rent-to-income ratio, and their homeownership rankings look more like North Dakota’s than Hawaii’s. As we might expect based on the relationship between housing costs and homeownership-measure gaps, their HPOPs are modestly lower than their owner-occupancy rates, with differences of 8.9, 6.0, and 10.1 percentage points, respectively, compared with a nationwide difference of 12.2 percentage points. Despite having higher housing costs, Montana ranks eighteenth in both the owner-occupancy rate and the HPOP. Figure 5 shows that both Minnesota and South Dakota improve their homeownership rank when we use the HPOP as the measure, moving from eighth and twentieth place, respectively, to fifth and seventh place.

Implications for public policy

Using the owner-occupancy rate as a measure of homeownership can still serve an important purpose. For example, in cases where the adults in households make group decisions about sharing costs or resources, a household-based analysis may be preferred to a person-level analysis. And a government may wish to know what share of its housing is owner-occupied for policy considerations, such as taxation purposes.

But the HPOP provides a homeownership measure that is better-suited for many policy conversations. For example, land use regulations are getting increased attention from policymakers and the press. The HPOP allows us to consider the potential relationship between the built environment and people’s preferences for living with other adults. When people live in an area where the housing stock can accommodate multi-generational households, do we see more multi-generational households?

The HPOP provides a homeownership measure that is better-suited for many policy conversations.

The new measure could also allow researchers to consider the long-term financial implications for young adults who spend more time living in the households of their homeowner parents. Compared to young adults who move out sooner, are these young adults more likely to become homeowners, or do they invest in education or housing differently as they age?

The HPOP enables such explorations by describing the homeownership rate for all adults. In providing a person-level statistic, the HPOP avoids lumping together all the adults in a household as either being renters or owners. It identifies a new housing status for adults who aren’t fully captured by the standard designations of “renter” or “homeowner.” Many of these adults likely are paying some kind of rent but are nevertheless excluded from standard renter counts.

Our estimates of the HPOP are available for you to explore. We look forward to seeing what others might discover through this more nuanced perspective on the nation’s homeowners.

Endnotes