By Charlene Crowell
For the first time in 30 years, rising home prices and interest rates have translated into a drop in existing home sales and worsening affordability challenges for middle class families.
Among the nation’s 46 million renter households, only one in seven – 6 million – in 2024 earned at least $126,700, the amount needed to afford a $2,570 monthly payment on a $412,500 median-priced home. And these escalating costs likely contributed to the 771,480 people who were unhoused in 2024.
For Black Americans, the homeownership gains that occurred between 2019 and 2023 have halted. Last year, the white-Black homeownership gap remained stuck at 27.7 percentage points, and the same measure for Latino families was 25.2 percentage points.
These are among the findings in The State of the Nation’s Housing 2025, an annual report published by Harvard’s Joint Center for Housing Studies (JCHS). Regarded by researchers and housing stakeholders as one of the most comprehensive assessments of the entire housing market, its findings share year-to-year changes and trends in construction, housing for owners and renters, as well as the effects of policy changes and proposals on the market.
Beyond its substantive findings, this year’s report is also a call to action.
“There must be a concerted effort to do more to address the affordability and supply crises,” says, Chris Herbert, Managing Director of the Center. “The potential consequences of inaction are simply too harmful to the macroeconomy and the millions of households striving for a safe, affordable place to call home.”
As of early 2025, home prices are up 60 percent nationwide since 2019 and are increasing 3.9 percent year over year. This year, a median-priced new home comes with a price tag of $459,826. Additionally, last year marked the fewest home sales on record since 1995.
“This is a shocking five times the median household income,” says 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.”
Two key factors affecting the costs of homeownership – home insurance and taxes – continue to rise. Home insurance premiums jumped 57 percent from 2019 to 2024, according to Freddie Mac.
Locales with the most severe weather-related disasters were hardest hit. Tornadoes, floodings, wildfires, and hurricanes impose financial tolls on renters and homeowners alike.
For example, in Miami where weather-related disasters frequently occur, the cost of home insurance for a median-priced home is $920 per month, or more than $11,000 per year.
“The scale and frequency of climate disasters has prompted private insurers not only to raise premiums, but in some cases to reduce coverage or pull out of markets entirely, as in California, Florida, and Louisiana,” states the report.
Rising property taxes add yet another affordability challenge.
In states considered ‘low tax,’ average annual property tax costs can be as low as $1,100, as in Alabama, or as high as $10,100 in New Jersey, generally considered a ‘high tax’ state.
Nationwide, the average 12 percent increase in 2021 and 2023 led to an annual $4,380 tax bill. While tax abatement programs have been implemented by some state and local governments, these cost-saving options tend to be limited to either senior citizens and/or low-income households.
Additional report findings show:
- 22.6 million renters are cost-burdened, spending more than 30 percent of their monthly earnings on their leases – the third consecutive year that this metric has increased. It is also 7.8 million more than in 2001.
- Among renters, 12.1 million households – 27 percent – spend more than half of their income on housing.
- 20.3 million families, or 24 percent of homeowners, are also cost-burdened, an increase of 646,000 in 2023.
- Insurance costs remained a substantial driver of rent growth, up 26 percent year over year in 2023 and twice the previous year’s rate. Other cost increases include repairs and maintenance (12 percent), administration (12 percent), property taxes (10 percent), and payroll (6 percent).
Amid these developments, there remain other looming possibilities: a national economic downturn, and the FY 2026 budget that would cut in half funding for the nation’s only housing agency. Should either become reality, the nation’s already-enormous housing challenges would be exacerbated.
“For too long, families of color and first-generation buyers have faced insurmountable barriers to owning a home due to predatory lending, high downpayment requirements, and increasing home prices,” said California Congresswoman Maxine Waters, the Ranking Member on the House Financial Services Committee. She is also the co-lead of refiled legislation entitled, The Downpayment Toward Equity Act that would provide $100 billion in direct assistance to help first-time, first-generation homebuyers purchase their first home.
Two Texas Members of Congress, Al Green, and Sylvia Garcia, are also co-leads.
“With Black and brown families historically denied the opportunity to own homes and build wealth, our bill will empower first-generation homebuyers to access robust homeowner assistance and build wealth… this is exactly the type of policy this moment demands – and Congress must pass it without delay,” added Massachusetts Congresswoman Ayanna Pressley, another co-sponsor.
The legislation has the support of diverse housing stakeholders: Americans for Financial Reform, the National Council of State Housing Agencies, the National Fair Housing Alliance, and the National Association of Realtors.
Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.