Is the US housing market becoming unsustainable?
A new report from Harvard’s Joint Center for Housing Studies reveals the US housing market faces unprecedented challenges, with record-high levels of unaffordability and declining homeownership rates threatening millions of American families.
The State of the Nation’s Housing 2025 report shows rental costs have reached a breaking point. For the third straight year, cost-burdened renters hit a record high of 22.6 million people in 2023, representing 50% of all renters. More than 12.1 million renters now spend over half their income on housing.
“The strain is creeping up the income ladder,” the report noted, with burden rates exceeding 70% for renters earning $30,000 to $44,999 annually. Even middle-income renters earning $45,000 to $74,999 saw their burden rates double to more than 45%.
Homeowners face rising costs
Homeowners are not immune to the crisis. The number of cost-burdened homeowners increased by 646,000 to 20.3 million in 2023, representing 24% of all homeowner households.
Insurance premiums and property taxes drive much of this increase. Home insurance premiums jumped 57% from 2019 to 2024, with the steepest rises in climate disaster-prone areas. Property taxes also climbed an average of 12% between 2021 and 2023.
Home prices soar while sales plummet
Home prices have surged 60% nationwide since 2019, continuing to rise at 3.9% annually. The median existing single-family home price reached $412,500 in 2024.
“This is a shocking five times the median household income,” said Daniel McCue, a senior research associate at the Center. “This is also significantly above the price-to-income ratio of 3 that has traditionally been considered affordable.”
As prices climbed, existing home sales dropped to a 30-year low.
Homeownership becomes increasingly difficult
Monthly mortgage payments on median-priced homes now require $2,570 under typical first-time buyer terms. Buyers need an annual income of at least $126,700 to afford this payment plus taxes and insurance.
“Only 6 million of the nation’s nearly 46 million renters can meet this benchmark,” said Alexander Hermann, a senior research associate at the Center.
The US homeownership rate fell in 2024 for the first time in eight years. Racial gaps persist, with white-Hispanic homeownership differences at 25.2 percentage points and white-Black gaps at 27.7 percentage points.
Federal policy concerns
The report warns that proposed federal funding reductions coincide with record homelessness levels. In January 2024, 771,480 people were homeless, a 33% increase since January 2020.
Managing director Chris Herbert emphasized the urgency: “There must be a concerted effort to do more to address the affordability and supply crises.”
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