As housing costs rise, incomes struggle to keep pace
Housing costs are at their highest in decades, according to new census data. The average monthly housing cost for homeowners — including mortgage payments, insurance, taxes, utilities and fees — averaged $2,035 in 2024, up from $1,960 in 2023.
Median household annual income grew by $1,602 over the same period, from $80,002 to $81,604, at a significantly slower rate than the rising cost of housing.
U.S. Census Bureau economist Jacob Fabina says the numbers indicate that many Americans are spending more than one-fifth of their income on housing.
“In 2024, the median percentage of income householders with a mortgage spent on these costs was 21.4%, which points to an increased burden on homeowners,” Fabina said.
The Washington Post says the figures show housing costs are increasing fast, while median incomes have stagnated, putting homeownership out of reach for many Americans.
“The cost of homes, high mortgage rates, increasing insurance costs, increasing HOA fees — all of that is just producing a serious affordability pinch that’s keeping people out of the housing market, and keeping the homeownership rate stagnant,” said Joel Berner, a senior economist at Realtor.com.
Key factors of rising housing costs
The Post reports there are a few factors to the affordability crunch, namely high mortgage rates and a lack of supply of homes for sale. Freddie Mac reports the average for a 30-year fixed-rate mortgage this week is 6.5%.
The Post also says that income has not risen to match the increasing cost of housing, with median income at about the same level it was six years ago in 2019 after adjusting for inflation.
The increasing cost of homeowner insurance and homeowner association fees have also contributed to rising monthly expenses. The median HOA fee was $135 in 2024. Nevada, Florida and Arizona are the top three states when it comes to such fees.
Adding to that, insurance premiums rose by an average of 5.3%. The larger the home, the bigger the bill.
The news is also tough for renters. The Census Bureau reports median rent rose 2.7%, from $1,448 in 2023 to $1,487 in 2024. Many renters spend more than 30% of their incomes on housing.
The Census Bureau says the highest median housing costs are in California ($3,001), Hawaii ($2,937), New Jersey ($2,797), Massachusetts ($2,755) and Washington, D.C. ($3,181).
Inflation on the rise
Meanwhile, the Bureau of Labor Statistics came out with fresh inflation numbers on Thursday.
The U.S. Consumer Price Index — the main gauge used by the Federal Reserve to monitor inflation — increased by 0.4% to 2.9% in August, up slightly from July. The rate was at its highest level since January.
All eyes will be on the Fed next week when its Board of Governors meets and will consider whether or not to cut interest rates. The Fed’s target for inflation is 2%.
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Ella Rae Greene, Editor In Chief
