The Homeownership Rate Is Soaring: What It Means

Despite gloomy economic, political, and healthcare news, America’s homeownership rate is rising. Here’s why.

Only a few years ago the homeownership rate nationwide was at historic lows. Now, during the post-pandemic economic recession, the homeownership rate recently hit its highest point in 15 years.

At a glance, this seems counterintuitive amidst widespread job loss, unemployment, and market uncertainty. But, as shown in a new report by, the homeownership boom provides some positive news resulting from COVID-19. Here are 4 big takeaways from this surprising trend.

1. The Millennial homeownership boom contradicts recent prevailing narratives

Homeownership rates for millennials are increasing more than any other group. This trend is a bit surprising because previous studies suggest that young people are settling down later in life and going to school for longer, thus delaying home buying.

The Millennial generation was scarred from the experience of graduating from college and entering the workforce around the time of the Great Recession. Many Millennials have a lot of student debt, high debt-to-income ratios, and a low amount of remaining free cash flow to increase savings for a down payment on a home.

Meanwhile, the marriage rate among young adults fell from 52.3 percent in 1990 to 38.5 percent in 2015. This implies that home buying among Millennials will happen later in life than it did for their parents, as the median age at first marriage continues to creep up. Given these factors, seeing home ownership rates increase for younger demographics is a very positive sign for the U.S. economy.

2. What’s really driving the rising homeownership trend?

Two primary factors are driving up homeownership rates. The need for more space because of COVID and low interest rates, which make housing more affordable.

It’s a cost vs. value calculation of what you can afford to pay on a monthly basis. A drop in interest rates like what we’ve seen this year translates into a significant reduction in monthly payments. If a house is worth $300,000, with a 4% interest rate, the monthly payment is $150 higher than with a 3% interest rate.

3. How is this happening during the time of coronavirus and widespread uncertainty?

The American job market is unevenly impacted by the current recession. Jobs that can be done from home are suffering far less (if at all) than jobs in retail and hospitality. Remote jobs also tend to pay more.

Additionally, with much of the population sheltering in place for long periods over the past 9 months, people were spending far less on travel, entertainment, and leisure activities. This allowed them to save more money by not going out or going on vacations.

Meanwhile, many moved in with their parents or friends to ride out the pandemic, cutting their housing expenses. As a result, the personal savings rate went up 33.7% in April of this year. This is a lot of extra cash to go toward mortgage down payments.

4. Why soaring homeownership rates are good news for America’s economy

Homeownership is a primary driver for building wealth. Homeowners are more likely to get involved in their local community — schools, civic events, fundraisers — which translates to better neighborhoods with more social cohesion, lower crime rates, and better schools.

As far as the economy overall, heightened real estate activity puts a lot of people to work all around the country, from agents and brokers, to construction workers, mortgage lenders, moving companies, property investors, designers, and everything in between. Moreover, new homeowners tend to spend a lot more money on furniture, appliances, and home alterations as they move in, fueling consumption, which is the largest component of America’s GDP.

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Polina Ryshakov

Polina is Sundae's Sr. Director of Research and Lead Economist. She has more than 15 years of valuation experience across commercial and residential real estate. Her background includes stints with Cushman & Wakefield, Hanley Wood, and Standard & Poor’s. Polina graduated with a double major in Economics and International Relations from the University of California at Davis and has been a CAIA Charter Holder since 2010.