Beyond the Facade: Why America’s Homeownership Rate is Not What It Seems

For decades, the standard benchmark for the American Dream has been the national homeownership rate. Currently pegged at 65 percent, this figure is a fixture of economic reports, political stump speeches, and financial news headlines. It suggests that nearly two out of every three households in the United States have achieved the milestone of owning their own property.

However, economists at the Federal Reserve Bank of Minneapolis are challenging this long-held metric. They argue that what we call the "homeownership rate" is, in reality, merely an owner-occupancy rate—a statistical artifact that measures housing units rather than individual financial independence. By shifting the lens from the house to the human, researchers have unveiled a significantly different reality: the true share of American adults who are homeowners is closer to 53 percent.

The Flaw in the Foundation: Home vs. Human

To understand the discrepancy, one must distinguish between a housing unit and a person. The traditional owner-occupancy rate tracks whether a dwelling is occupied by the person who owns the title to that property. If a home is owned by a resident, it is classified as "owner-occupied." If a landlord owns the property and charges rent, it is "renter-occupied."

While this tells us about the structure of the housing market, it fails to account for the millions of adults living inside those structures. Consider a hypothetical cul-de-sac containing five homes. Four are owned by the residents, and one is rented. By traditional metrics, the homeownership rate for this neighborhood is 80 percent. However, if those four owner-occupied homes are also housing adult children, aging parents, or roommates who have no equity in the property, the "owner-occupancy" measure hides their non-owner status. In this scenario, while 80 percent of the houses are owner-occupied, only 50 percent of the adults are actual homeowners.

This observation led the Minneapolis Fed to develop the Homeowners-to-Population ratio (HPOP). By dividing the total population of adult homeowners by the total adult population, the HPOP provides a granular, person-centric view of housing that the traditional rate simply cannot capture.

Chronology of a Shifting Metric

The evolution of how we measure homeownership is rooted in the history of U.S. Census data. For the better part of a century, the U.S. Census Bureau’s American Community Survey (ACS) has been the gold standard for tracking housing. The system was designed to categorize "households," typically identifying one "reference person" or head of household.

Historically, this was sufficient for an era of nuclear families. However, as economic conditions have shifted over the last two decades, the disconnect between housing units and the people living in them has widened.

• 2006–2015: During the aftermath of the Great Recession and the housing market collapse, the HPOP for younger Americans plummeted. A 25-year-old, for instance, saw their probability of being a homeowner drop from 20 percent in 2006 to 12 percent by 2015.
• 2015–2024: As the economy stabilized and the housing market entered a high-demand, low-inventory phase, the HPOP for young adults saw a modest recovery, rising to 14 percent by 2024.
• The Over-70 Trend: Conversely, the HPOP for adults over 70 has climbed consistently over the past two decades. This increase, which totals about 5 percentage points, is often missed by the traditional owner-occupancy rate, which fails to account for older adults who might be living in multi-generational arrangements or group settings that the old metric ignores.

Supporting Data: The Impact of Demographics

The HPOP does more than just lower the national average; it changes our understanding of demographic trends. When using the traditional owner-occupancy rate, analysts often use the age of the "household head" to represent all residents. This approach is fraught with errors.

For instance, the owner-occupancy rate for households headed by adults under 35 was reported at 37 percent in 2024. When the Minneapolis Fed applied the HPOP—which accounts for every adult in the household, including those living in dormitories or at home with parents—the reality was stark: only 22 percent of adults under 35 are actual homeowners.

Furthermore, the traditional measure completely ignores "group quarters." College students in dorms, the elderly in nursing homes, and residents of other communal facilities are essentially invisible to the owner-occupancy rate. By including these groups in the HPOP, economists gain a more accurate picture of the economic well-being of the American population.

The data indicates that over 13.9 percent of American adults live in owner-occupied homes but are not owners themselves. These "misrepresented" adults include adult children, extended family members, and roommates—a demographic that is growing as housing affordability remains a primary hurdle for entry-level buyers.

Regional Variations: Hawaii vs. North Dakota

The disparity between the two measures is not uniform across the United States. It is deeply tied to local housing costs. The Minneapolis Fed utilized the rent-to-income ratio—the average annual rent divided by average personal income—to measure affordability.

• The Hawaii Example: As one of the most expensive housing markets in the nation, Hawaii shows a massive gap between its owner-occupancy rate and its HPOP (a 18.9 percentage point difference). This suggests that high costs are forcing adults to co-reside, effectively "masking" the true extent of the housing crisis under the guise of high owner-occupancy.
• The North Dakota Example: Conversely, North Dakota ranks as one of the most affordable states. There, the difference between the two measures is only 3.9 percentage points. In North Dakota, young adults are far more likely to live independently, leading to a much tighter alignment between housing units and homeowners.

These state-level findings demonstrate that in more expensive markets, the traditional homeownership rate is a deceptive indicator of prosperity. It tracks the houses, not the hopes of the people living in them.

Implications for Public Policy

The shift toward the HPOP has significant ramifications for policymakers tasked with addressing the housing crisis. If the government relies on the 65 percent owner-occupancy rate, they may underestimate the number of people who are effectively "locked out" of the wealth-building benefits of homeownership.

1. Land Use and Zoning

Policymakers currently debating zoning reform often look at how many households exist in a given area. The HPOP allows for a more nuanced discussion: If high housing costs are driving multi-generational living, does the current built environment facilitate this, or is it a sign of economic desperation? Understanding this distinction is vital for urban planning.

2. Wealth Inequality

Housing is the primary source of wealth for most American families. If the HPOP reveals that a significant portion of the population lives in homes they do not own—and may never own—the policy focus may need to shift from simple subsidies to broader structural changes in the housing supply and credit markets.

3. Economic Mobility

For young adults, the "delay" in homeownership is often interpreted as a lack of readiness or interest. The HPOP provides data to challenge this, showing that many young people are living in owner-occupied homes precisely because they cannot afford to enter the market. This creates a feedback loop where capital stays concentrated in the hands of established owners, while younger generations remain tenants—even when living in family-owned homes.

Conclusion: A More Nuanced Future

The Federal Reserve Bank of Minneapolis’s push for the HPOP is not an attempt to discard the traditional homeownership rate, which remains useful for taxation and infrastructure planning. Rather, it is a call for intellectual honesty in economic reporting.

By measuring homeownership by the person rather than the property, we expose the reality of a housing market under strain. We see that the American Dream is not as widely held as the 65 percent figure suggests. In a world where housing costs continue to outpace income, the HPOP serves as a vital diagnostic tool—one that reveals the true state of financial independence in the United States, one resident at a time.

As researchers and policymakers continue to grapple with the complexities of the modern economy, the move toward person-level metrics like the HPOP represents a necessary evolution in our understanding of what it truly means to be a homeowner in America.