Abstract: The extant literature hasn't exploited the effects of homeownership and heterogeneous human capital on urban innovation. Employing the city-level databases of China's 69 large- and middle-sized cities during 2010-2015, this paper elucidates the intermediary effects of homeownership on innovation. The research finds that homeownership has negative effects on innovation input and output. Thus, homeownership and rental markets should be developed in balance. Homeownership affects innovation by virtue of housing price rather than population migration. As such, we should prevent the negative impact of housing price volatility on innovation. Moreover, the effects of homeownership on innovation are more significant and greater in lower human capital cities than that in higher human capital cities. Hence, we should pay more attention to the innovation in lower human capital cities.