According to this article: Sagging Pants: Hip Hop Trend or Prison Trend?
A Way to Display Homosexuality in Prison
Sagging pants was never meant to be fashionable. Prisoners wear their pants this low because belts are a popular way to commit suicide by hanging oneself, to hang others, or to use as a weapon in fights. Prisoners are also not allowed to have shoestrings for the same reasons. But there is an even more obvious reason why pants are sagging in prison. If the pants are below a man's bottom, it is to introduce to other men that he is homosexual. As Eazy E once said about women in skirts, "For easy access, baby."
From Wiki: Down-low (slang)
African-American men who engage in sexual contact with other men but are either closeted or do not identify as gay are often described as being on the down-low.
Niggers, or more politely "Simian- Americans" , are not necessarially homesexuals but rather Omni-Sexuals: they will have sex with anything that is alive; men, women or barnyard animals.
Sagging or "down-low" pants did begin in prisons. If you go to a zoo, you will notice that other simians also have prominent butts, which they display, especially during mating. With the advent of "color gangs" ( crips, bloods etc) they would display their colored underwear to identify with their gang. Simian-Americans are pack animals who mark their territory (now with graffiti ) and defend it violently. Always treat them as you would any other wild animal you might meet in the woods; get out of their way (cross the street) or be prepared to defend yourself.