Black renting families are catching up to whites in terms of mortgage readiness, although a sizable racial disparity in home buying power remains.

Around 7.8% of Black non-home-owning families were “income mortgage-ready” compared to 12.5% of whites in 2022, according to research shared Friday by Zillow. The racial gap of 4.7% fell from a 7.9% split in 2012. 

The data from the U.S. Census Bureau’s American Community Survey defines “income mortgage-ready” as a family being able to make home loan payments for a typical home in their local market. Among the nation’s 138 million non-home-owning families in 2022, 6.3 million were considered ready by the definition. 

“It’s crucial to recognize the existence of additional barriers beyond monthly cost, including access to funds for a down payment and closing costs — as well as other barriers that significantly contribute to mortgage denials,” said Orphe Divounguy, Zillow senior economist, in a press release. 

The report comes days after a National Association of Realtors study found 44.1% of Black Americans today are homeowners, well behind rates for Hispanic Americans and Asian Americans. Mortgage applicants of color are more likely to be denied than white applicants, studies show, with lenders often attributing insufficient credit history or debt-to-income ratios for Black would-be-buyers. 

The 7.8% of Black families income mortgage-ready compose of 738,000 households among 9.4 million Black non-homeowners, Zillow found. That share is greatest in typically more affordable Midwest metros such as Detroit (13.3%), Memphis (12.8%), and St. Louis (12%).

The ratio of whites who are income mortgage-ready is still greater by several percentage points in those cities, and far larger in the nation’s most expensive destinations like the Bay Area and the Northeast. 

At-large the number of renters of all races able to afford a mortgage fell from 12.9 million in 2021 to 6.3 million in 2022. The dip coincides with rates soaring from 3% to 7% over that time, and the median nationwide home price hovering closer to $400,000 amid scant supply.