The homeownership rate is lower than you think

A new way of measuring America's homeownership rate finds that it is far lower than commonly understood, especially for young adults.

Why it matters: Housing is the largest source of wealth for many Americans, and the new measure finds that barely half of adults have access to that piggy bank.

Zoom out: The findings show "that younger people are having an even harder time buying a house than traditional data would suggest," per a note about the findings from housing policy analyst Jaret Seiberg at TD Cowen.

By the numbers: The new measure, calculated by the Federal Reserve Bank of Minneapolis, finds that only about 53% of American adults own their own homes — not the commonly cited homeownership rate of 65% calculated by the Census Bureau.

• For adults under age 35, it's bleaker: Only 22% are homeowners under the new measure, compared with 37% under the traditional one.

Arkansas tracks with the current national average, but its peaks and valleys since 2006 have been more dramatic.

• Both 2013 through 2019 were low points by the new estimate, with ownership hovering around 51%.

How it works: Instead of looking at home occupancy, the researchers counted the share of those 18 and over who own their home. (They call this the "homeowners-to-population ratio," or HPOP.)

• Those who count as homeowners: the head of an owner-occupied household, including their spouse or unmarried partner.

• Those who don't: other adults in the house, including adult children, parents, relatives, friends or roommates.

"It's not that the old measure was doing anything wrong, but you had to know what it was doing to interpret it correctly," says Erik Hembre, a senior economist at the Minneapolis Federal Reserve who coauthored the research.

• "I think this is more aligned with what people have in their mind when we talk about the homeownership rate."

The bottom line: The housing affordability crisis is actually worse than it seems.

Read the full story