A new report from the Joint Center for Housing Studies of Harvard University reveals that the income required to afford a median-priced home in the U.S. has nearly doubled since 2020, reflecting significant affordability challenges in the housing market [1]. The report, titled 'State of the Nation's Housing,' highlights that existing home sales remain near their lowest levels in three decades, a threshold first reached in 2023 [1]. New home sales have been relatively flat, while rental retention rates have increased and new occupancies have declined. New construction starts fell by 1% over the past year, driven by a 7% drop in single-family starts [1].
The report details that the median price for both new and existing homes now exceeds $400,000, with existing home prices rising 54% since 2020 and currently standing at about five times the median income—a significant increase from the 3-times ratio seen in the 1990s [1]. Mortgage rates are above 6%, pushing the monthly payment on a median-priced home to $3,100 in the fourth quarter of 2025, up from $1,700 in early 2020 [1]. As a result, the household income needed to afford such a payment has surged to over $120,000, compared to $66,000 in 2020 [1].
The report attributes subdued housing activity to high costs, economic uncertainty, and a lack of affordable options. Employment growth slowed sharply from a gain of 1.5 million in 2024 to just 116,000 in 2025, while consumer confidence dropped by more than 20 percentage points in 2025 and fell further in early 2026 due to the Iran war, reaching an all-time low in April [1]. The rate of growth in homeowner households has halved, causing homeownership rates to decline for the second consecutive year. The year-over-year increase in renters in Q1 2026 was less than half of the previous year's figure [1].
The report underscores that high mortgage rates and limited supply have made homeownership increasingly unattainable for many, with affordability pressures likely to persist unless there is a significant shift in prices, rates, or supply [1].
CONCLUSION
The U.S. housing market faces severe affordability challenges, with the income needed to buy a median-priced home nearly doubling since 2020 due to high prices and mortgage rates. Market activity remains subdued, and both homeownership and rental household growth have slowed sharply. Without improvements in affordability or supply, these pressures are expected to continue impacting the market.