Housing Affordability in the U.S. Today: Crisis, Causes, and Paths Forward

For millions of Americans, the dream of homeownership feels further out of reach than ever before. Rising home prices, higher mortgage rates, and an ongoing shortage of affordable housing have created a market that squeezes not only first-time buyers but also renters and even middle-income families who once had an easier path to stable housing.

The numbers paint a sobering picture. According to the National Association of Home Builders, more than half of U.S. households—about 76 million families—cannot afford a $300,000 home. The Harvard Joint Center for Housing Studies reports that by mid-2025, the median home price reached $441,738, with mortgage payments averaging $2,570 per month. That leaves the median price-to-income ratio at 5.0, well above the 3.0 benchmark long considered the threshold for affordability Harvard. And renters face no relief—over 22 million renter households are cost-burdened, meaning they spend more than 30% of their income on housing.

So how did we get here, and what might it take to restore balance?

Why Housing Has Become So Unaffordable?

Several factors have collided to create today’s affordability crisis.

The most obvious is the sharp rise in both home prices and interest rates. Between 2019 and 2024, U.S. home values climbed nearly 60%, jumping from around $260,000 to more than $412,000. By mid-2025, that number pushed above $441,000. At the same time, mortgage rates that had hovered around 3% during the pandemic now sit closer to 6.5–7%, with many analysts predicting they will remain elevated well into 2026. For buyers, the combination is devastating: monthly mortgage costs in places like California have soared, with a mid-tier home now requiring a $5,900 monthly payment, up more than 80% since 2020 LAO.

But rising rates and prices are only part of the problem. Supply shortages are even more fundamental. The U.S. is short an estimated 3.8 million homes relative to household formation. At the lower end of the market, the shortage is more extreme—there are only 35 affordable rental units available for every 100 extremely low-income households NLIHC.

Demographics and economic pressures compound the challenge. High construction costs, driven by labor shortages, tariffs on imported materials, and lengthy permitting processes, make it difficult for builders to deliver affordable new housing. Meanwhile, baby boomers staying in their homes longer limit supply turnover, especially in desirable areas.

Who Is Affected the Most?

While affordability is an issue across income levels, some groups are particularly hard hit.

Renters and the lowest-income households face the harshest realities. More than 22 million renter households are considered cost-burdened, and millions spend more than half of their income on housing. This leaves little for food, transportation, healthcare, or savings, perpetuating cycles of financial insecurity.


Middle-income buyers, once the backbone of the housing market, are increasingly priced out. A household earning $50,000 per year can now afford less than 10% of homes on the market, while those making $75,000 per year have access to only about 20% of listings NAR. In expensive coastal metros, the situation is even worse: in San Jose, only about 10% of listings are affordable to a median-income household; in Los Angeles, that number drops to just 3% SF Chronicle.

The crisis isn’t evenly distributed nationwide. States in the South and Midwest often fare better, with more building activity and lower land costs helping keep homes relatively more affordable. By contrast, many states in the Northeast and West consistently rank among the least affordable Realtor.com.

Market Shifts and Emerging Trends

Despite the gloomy headlines, there are signs of shifting dynamics in the market.
One surprising trend: new homes are actually selling at discounts compared to existing ones. In June 2025, the average new home sold for $407,200—roughly $28,000 less than the typical existing home. Builders are offering incentives and price cuts as inventory of new builds grows, with nearly double the months’ supply compared to existing homes New York Post.

At the same time, the average size of newly built homes is shrinking. In 2025, the average fell to around 1,800 square feet, down 7% from 2020. Developers are pivoting to smaller “cottage” models as low as 1,000 square feet, especially in states like Texas, to make new homes more attainable FT.

Affordability has also seen slight improvement in some regions thanks to wage growth and modest dips in mortgage rates from their peak. Cities like Cleveland, Phoenix, and Austin show buyers regaining a bit of power in negotiations. Still, the national Housing Affordability Index sits below the neutral level of 100, meaning a typical family cannot comfortably afford a typical home NAR.

Public Sentiment and Policy Debates

As affordability declines, public opinion on housing is shifting. A recent survey found that 63% of Americans now view the term “affordable housing” positively—a notable change from past years when it often carried stigma. Nearly half of respondents support converting surplus commercial or government buildings into housing, while others favor including affordable units in new developments or offering tax incentives to developers New York Post.

At the same time, pessimism runs high. Nearly half of Americans believe that homeownership in 2025 is simply unrealistic due to high costs, mortgage rates, and large down payment requirements.

Policy responses are beginning to emerge. The current administration is considering tariff relief on construction materials and even declaring a housing emergency to fast-track new building Axios. YIMBY (“Yes In My Backyard”) advocates continue to push for zoning reform and greater housing density, while others argue demographic shifts—such as aging baby boomers eventually downsizing—may naturally ease the crisis over the next decade Washington Post.

Yet many experts stress that market forces alone won’t fix the problem. The National Low Income Housing Coalition emphasizes the need for deeper investments in housing trust funds, rental vouchers, and public housing, particularly for extremely low-income families who are consistently left behind. Equity-focused policy approaches are also crucial, ensuring that solutions address not just affordability but also the persistent racial and social disparities in housing access NLIHC.

A Path Forward

The housing affordability crisis is not unsolvable, but it does require coordinated action. Expanding supply is essential—through streamlined permitting, incentivizing smaller homes, and reducing costs of construction materials. Policymakers can help by funding affordable housing programs, expanding rental assistance, and rethinking zoning rules that restrict density.

At the same time, communities must wrestle with difficult questions about growth and equity. How can we add housing without displacing existing residents? How do we ensure that affordable housing isn’t segregated or stigmatized? And how can we strike a balance between local control and the urgent need for more homes?

The stakes are high. Housing is more than a commodity; it’s the foundation of stability, opportunity, and well-being. Without serious steps to restore affordability, the divide between those who can and cannot secure stable housing will continue to widen, with ripple effects across the economy and society.

As we move forward, one thing is clear: ensuring affordable, accessible housing for all is not just an economic issue—it’s a moral one. The question is whether policymakers, developers, and communities will act boldly enough to meet the challenge.