Housing costs squeeze owners and renters alike, outpacing inflation

Housing costs rose faster than inflation last year for renters and owners alike, according to new Census Bureau data that paints a vivid picture of the growing financial burden of finding and affording a home in the United States.

The median monthly cost of owning a home — which includes mortgage and insurance payments, real estate taxes and other fees — reached $2,035 in 2024, after adjusting for inflation, from $1,960 the year prior.

People who moved in 2024 faced a median mortgage payment of $2,225 per month, the highest in decades. That’s well above the $1,521 median payment for mortgages overall, and 20% more than the median payment for those who moved just three years prior, even if the more recently purchased homes cost less.

Renters also faced a tougher market. Growth in median rent, including utilities, increased by 4.1% to reach $1,307 after inflation was taken into account, according to the Census Bureau.

The latest figures from the annual American Community Survey are consistent with what data across several sources has made clear for years: Housing costs are rising rapidly while the median income has stagnated, placing homeownership out of reach and straining everyday budgets 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

The increases in both rental and homeownership costs can be traced back to two main factors. Mortgage rates started to soar in 2022, reaching their highest levels in decades. While the Federal Reserve started to cut interest rates last year, mortgage rates remain high. The housing supply is also limited in many parts of the U.S., the American Community Survey found.

Rising home insurance premiums and homeowners association fees have also contributed to growing monthly expenses. The median annual cost of property insurance increased by 5.3% last year, the Census survey found, with bigger increases for larger homes. Nearly a quarter of all U.S. homeowners paid fees to a condo or homeowners association last year, at a median cost of $135. In Nevada, Florida and Arizona, 45 to 50% of households paid such a fee.

Incomes have not risen to meet the growing cost of housing. Census data released Tuesday found that inflation erased income gains in 2024, leaving the median income at roughly the same level it was in 2019.

“You think that, ‘OK, if I get a good price, and I get a good mortgage rate, I should be able to afford my monthly payment,’” Berner said. “But then there are these things on top of it that just further stretch people thin.”

The gap between what people are making and how much they’re spending on their housing has widened, he added.

“It's just kind of becoming more and more difficult for people to save up for buying a home,” he said. Last year was the slowest home sales year since 1995, and even though home prices cooled earlier this year, sales are still looking slow, he added.

Monthly owner costs and median home values didn’t change significantly in the country’s costliest areas, many of which are in the Northeast and the West. Hawaii and California remained the most expensive states, alongside the District of Columbia, with median home values of $875,900, $759,500 and $733,400, respectively. Homeowners with a mortgage in those three locations were also burdened with the highest overall monthly costs at roughly $3,000.

But several southern states experienced the sharpest increases in those monthly costs last year. Florida, where the median household income in 2024 was $77,735, saw the greatest spike at 8%, bringing the median monthly owner cost to $2,168. North and South Carolina, Georgia, Wyoming, Mississippi and Alabama were among the states that saw faster growth in monthly owner cost in 2024 than in the year before.

At the same time, the number of homes owned “free and clear” — without a monthly mortgage — climbed, with 900,000 more owned homes paid off in 2024 than the year before. Berner said he believes that may be because people with lower mortgage rates are remaining in their homes.

He also noted that more homes are being purchased with cash. Census data released Tuesday found that the richest 10% of households saw their wages rise in 2024, bucking the broader trend toward stagnating income.

“The ‘haves’ have, and they’re buying homes in cash,” Berner said. “And the ‘have-nots’ can’t afford a mortgage because of rates, and they’re not buying homes.”