New Report Paints Bleak Picture on State of Housing in America

Jonathan Berk
22 hours ago
3 min read

The 2025 State of the Nation’s Housing report by the Harvard Joint Center for Housing Studies presents a concerning view of the U.S. housing situation. Years of rising home prices and interest rates have led to a severe affordability crisis. The median home price now exceeds $412,000, nearly five times the typical household income, while mortgage rates around 6.7% have pushed monthly payments to unprecedented levels, necessitating an income of over $125,000 to comfortably purchase a median-priced home. Consequently, homeownership gains—especially among Black and Hispanic households—have stalled or reversed, and existing-home sales have reached their lowest point in 30 years. Concurrently, rents continue to rise, with more than 22 million renters spending over 30% of their income on housing, and over 12 million facing severe financial strain. Despite a surge in multifamily construction, particularly for high-end units, affordable rental options remain limited. Simultaneously, homelessness has increased, with more than 770,000 people unhoused as of early 2024, marking a 33% rise since 2020. Adding to these challenges are increasing property taxes and homeowners’ insurance costs, especially in areas prone to climate disasters like floods and wildfires. While some state and local governments are implementing reforms to increase housing supply and streamline permitting, a lack of federal investment and economic challenges such as construction labor shortages and rising material costs threaten further progress. The report highlights the urgent need for a comprehensive national strategy to enhance housing affordability, boost construction—particularly of entry-level homes and affordable rentals—and strengthen housing systems against both climate and financial risks.

1. Housing Market Overview

Home prices continue climbing: up 60% since 2019 and rising ~3.9% year-over-year, pushing the median single-family home price to $412,500, which is nearly 5× median household income—far above the traditional affordability threshold of 3× income.
Existing-home sales hit a 30-year low (~4.06 million), while inventories rose ~20%—though still historically low.
New construction is picking up: single-family starts rose 7%, with about 1 million units completed. However, builders are downscaling home size and offering incentives amid cost pressures.

2. Escalating Affordability Barriers

Mortgage rates remain steep (~6.7%), driving median monthly payments to $2,570—roughly 40% higher than in 1990 (adjusted for inflation). A buyer now needs ~$126,700 in annual income, which only about 6 million renters currently earn.
Downpayment hurdles are significant: a typical 3.5% downpayment with closing costs now requires ~$26,800 in cash, or ~$95,000 for a traditional 20% down payment.
These pressures stalled homeownership growth for the first time in eight years, reversing progress among Black and Hispanic households and widening racial homeownership gaps.

3. Rental Housing & Homelessness

Renters are under severe strain, with a record 22.6 million households spending over 30% of income on housing—and over 12 million spending more than half.
Rental construction is booming: 608,000 multifamily units were completed in 2024 (a near 40‑year high), though most are high-end, with fewer affordable units built.
Homelessness is also rising: about 771,000 individuals were homeless in January 2024—a 33% increase since 2020.

4. Rising Costs & Environmental Risks

Homeowners face growing burdens from surging insurance premiums (up ~57% since 2019) and property taxes (up ~12% from 2021–23), particularly in climate-vulnerable regions.
Wildfire and other climate-related damage are intensifying, affecting housing supply, costs, and insurance availability.

5. Policy, Economic Outlook & Risks

Federal housing support is being cut, undermining affordable housing programs. State and local efforts are stepping up, but face revenue and funding constraints .
Headwinds like rising material costs (e.g., new tariffs +$10,900 per home), reduced immigration (shrinking construction labor supply), and the potential for an economic downturn threaten to deepen affordability and supply challenges.

In 2025, the U.S. housing market faces high prices, increased interest rates, growing financial burdens, and rising homelessness, worsened by climate risks and reduced federal funding. While rental and new construction supply increase, most developments target higher-income households. Urgent action is needed at all government levels to maintain affordability programs, expand housing supply—especially affordable rentals and entry-level homes—and improve climate and financial resilience.

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