JCHS Finds Housing Market Unease Amid a Worsening Affordability Crisis
(Illustration: JCHS)
The U.S. housing market remains shrouded in uncertainty, with little indication that record-high levels of unaffordability will ease anytime soon, a new report from the Harvard Joint Center for Housing Studies finds.
High home prices and interest rates have pushed sales to their lowest level in 30 years, according to The State of the Nation’s Housing 2025.
The report noted insurance premiums and property taxes are increasing, high rents have left record numbers with cost burdens and devastating wildfires have highlighted the growing dangers of climate disasters.
“Amid concerns about diminished federal supports, state and local governments are ramping up efforts to tackle the affordable housing crisis, but the increasing possibility of an economic downturn threatens to deepen these challenges,” the JCHS said.
Chris Herbert, Managing Director of the Center, said there must be a “concerted effort” to do more to address the affordability and supply crises. “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,” he said.
Some Takeaways from The State of The Nation’s Housing
• Renter Cost Burdens Hit Another Record High
For the third consecutive year, in 2023, the number of cost-burdened renters (those spending more than 30% of their income on housing and utilities) reached a record high at 22.6 million renters (50%).
While households with lower incomes constitute the bulk of burdened renters, the strain is creeping up the income ladder: burden rates were over 70% for renters earning $30,000 to $44,999 and rates doubled to more than 45% for renters earning $45,000 to $74,999.
• Insurance and Property Taxes Continue to Increase
Homeowners are increasingly burdened by rising housing costs as well. In 2023, the number of cost-burdened homeowners rose by 646,000 to 20.3 million, representing 24% of all homeowner households.
The rising costs are partially explained by steep increases in insurance premiums and property taxes. Home insurance premiums jumped 57% from 2019 to 2024, with the sharpest increases in areas with the greatest risk of a climate-related disaster. 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. Property taxes also increased an average of 12% between 2021 and 2023.
• As Home Prices Grow, Sales Drop to a 30-Year Low
As of early 2025, home prices are up 60% nationwide since 2019 and still rising at a rate of 3.9% year over year. Consequently, the median existing single-family home price hit a new high of $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.”
• Builders Respond with Smaller Homes and Mortgage Rate Buydowns
New home sales, however, increased by 3% last year. Contending with the same affordability pressures as existing home sellers, many builders responded by producing homes that were smaller or had fewer amenities. The median size of a new single-family home declined for the third consecutive year in 2024 and many builders cut prices or offered mortgage rate buydowns to facilitate sales.
• U.S. Homeownership Rate Falls as Barriers to Homeownership Rise
Last year, monthly mortgage payments on the median-priced home rose to $2,570, under terms typical to first-time homebuyers (30-year loan with a 3.5% downpayment). This record-breaking mortgage payment is 40% higher than in 1990. A buyer would need an annual income of at least $126,700 to afford it and the associated taxes and insurance costs.
“Only 6 million of the nation’s nearly 46 million renters can meet this benchmark,” Alexander Hermann, a senior research associate at the Center. “Amid this, the U.S. homeownership rate fell in 2024 for the first time in eight years.”
• Rental Demand Remains Strong, but Construction Largely at High End of the Market
As fewer households have been able to become homeowners, the renter population has grown, jumping by 848,000 in 2024. This demand is absorbing the wave of new multifamily rental units: in 2024, multifamily developers completed 608,000 new units, the most in nearly four decades. However, much of this construction was at the upper end of the market; the number of higher-rent units has increased dramatically while the number of lower-rent units has fallen substantially.
