Income for Median-Priced Home Nearly Doubles Since 2020

The income required to afford a median-priced American home has surged to more than $120,000, nearly double the $66,000 needed in 2020, according to the Harvard Joint Center for Housing Studies’ annual “State of the Nation’s Housing 2026” report released June 17. The findings underscore a deepening affordability crisis as home prices continue to outpace wage growth, with existing home prices rising 54% since 2020 to roughly five times the median household income.

A Market in Stasis

The report paints a picture of a housing sector caught between high costs and weakening demand. Existing home sales remain near the lowest levels in three decades, first reached in 2023, while new construction starts dipped 1% over the past year, driven by a 7% decline in single-family starts. As Fox Business reported, the monthly mortgage payment on a median-priced home reached $3,100 in the fourth quarter of 2025, up sharply from $1,700 in early 2020, with mortgage rates hovering above 6%.

“Although supply shortages are still a major concern, depressed demand became a headline in housing over the past year,” the report states, noting slower growth in both homeowner and renter households compared with a year ago.

Rising Costs Crush Renters and Homeowners Alike

The affordability crisis extends well beyond homebuyers. According to Smart Cities Dive, a record 22.7 million renter households — 49% of all renters — were cost-burdened in 2024, meaning they spent at least 30% of their income on housing. Of those, 12.1 million were severely cost-burdened, spending more than half their income on housing. Homeowners fared little better, with 20.7 million cost-burdened households in 2024, an increase of 4 million since 2019.

Daniel McCue, lead author of the report, summed up the situation bluntly: “Construction is down, home sales are flat and cost burdens are up.”

The loss of affordable rental units has been particularly stark. The number of rental units below $1,000 per month (inflation-adjusted) plunged more than 30% between 2014 and 2024 — a loss of 7 million units. Chris Herbert, managing director of the Joint Center for Housing Studies, called this one of the report’s most “shocking findings,” noting that these units have been “lost to inflation in a tight market.”

Economic Headwinds Weigh on Housing Demand

Broader economic forces are compounding the housing market’s troubles. Employment growth slowed dramatically from a gain of 1.5 million jobs in 2024 to just 116,000 in 2025. 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.

“Without a job, graduates are less likely to form a new household or move to a new region,” the report says. “Without confidence in employment, families are less likely to move or make a big purchase like a house.”

Residential mobility has hit a record low, with just 11.2% of households relocating in 2024. Meanwhile, net international migration halved in 2025, and the Census Bureau estimates it could fall another 75% in 2026, further slowing population growth and future housing demand, according to Business Insider.

Homeownership Slips Among Young Adults

The homeownership rate declined for the second consecutive year to 65.2% in 2025. The largest decline was among adults under 35, with just 37% owning homes compared with 39% in 2022. The price-to-income ratio — now at roughly five times median income — stands well above the three-times ratio that prevailed in the 1990s, signaling how far homeownership has drifted from historical norms.

Non-mortgage costs are also climbing. Business Insider reported that property taxes rose 31% on average nationally between 2019 and 2025, while home insurance premiums increased 72% over the same period, adding further financial strain on homeowners.

States Step In as Federal Aid Falls Short

For the first time, states are taking unprecedented action on housing policy. Washington, Vermont, and Maine have passed sweeping reforms allowing small multifamily buildings on properties previously zoned for single-family homes, while Arkansas and Iowa have mandated accessory dwelling units. Stockton Williams, executive director of the National Council of State Housing Agencies, told Smart Cities Dive that “states across the country today are taking unprecedented action on housing.”

However, federal rental assistance remains “profoundly underfunded,” the report states. Only one in four very-low-income households receive federal housing subsidies, leaving 13.8 million eligible households unassisted as of 2023.

What to Watch

The report warns that the U.S. faces “interlocking housing crises — affordability, homelessness, climate change, and discrimination — that demand coordinated action across federal, state, local, private, and nonprofit actors.” With consumer confidence at historic lows, construction softening, and the supply of affordable housing shrinking, the path forward will likely require a combination of state-level zoning reforms, federal investment, and market stabilization before meaningful relief reaches American households.