Homeownership rate

The US homeownership rate is estimated at 65.5% in 2025, marking a slight decline after a period of industry turbulence. This drop follows the Federal Reserve's aggressive interest rate hikes starting in 2022. Higher borrowing costs, elevated inflation, and recession concerns have discouraged potential homebuyers and slowed housing market activity. These tightened financial conditions have affected buyers' access to affordable mortgage financing.

From 2020 to 2025, homeownership rates have been influenced by significant macroeconomic and policy events. The onset of the COVID-19 pandemic in 2020 led to a surge in homeownership due to interest rates slashed to historical lows, momentarily increasing the rate to 66.6%. However, this momentum proved unsustainable. In 2021, a reversal began as inflationary pressures from economic recovery efforts arose. The Federal Reserve responded with monetary tightening, starting rate increases in 2022, which led to higher mortgage rates and less affordable home purchases for many households. Inflation and recession fears further drained consumer confidence and reduced eligible buyers. Demographic patterns, like an increasing population of potential first-time buyers, couldn't offset these headwinds. Rising construction costs and high home prices further narrowed the pool of prospective homeowners, particularly affecting younger and lower-income groups who remained in rentals.

Overall, the homeownership rate is projected to fall by 1.1 percentage points from 66.6% in 2020 to 65.5% in 2025. While the market sees low rental vacancy rates and robust residential construction, these trends haven't countered the impacts of high financing costs and weakened buyer sentiment. The environment has become less favorable for first-time and marginal buyers, leading to the rate decline.