Housing costs strain owners and renters alike.
Homeowners and renters across the US are struggling with high housing costs, according to our new State of the Nation’s Housing 2024 report. Millions of potential homebuyers have been priced out of the market by high home prices and interest rates, while the number of renters with cost burdens has hit an all-time high. However, a surge in new multifamily rental units is slowing rent growth and increasing single-family construction is starting to lift for-sale inventories. Still, addressing the country’s housing crisis, including the record number of people experiencing homelessness, the inadequate housing safety net, and the growing threat of climate change, will require contributions from the private and nonprofit sectors as well as policymakers at all levels of government.
Housing costs continue to rise
Both homeowners and renters struggle with high prices in 2024. On the for-sale side, home prices reached a new all-time high in early 2024 despite persistently elevated interest rates, rising at an annual rate of 6.4 percent in February. With these gains, the US home price index is now a whopping 47 percent higher than since early 2020. The rise in prices has pushed the median sales price to about five times the median household income. Meanwhile, in the rental market, although rent growth slowed to just 0.2 percent year over year in early 2024, rents remain up 26 percent nationwide since early 2020 and are rising in three out of every five markets.
Homeownership increasingly out of reach
After a brief dip in early 2024, interest rates on the 30-year mortgage rose to over 7.0 percent by mid-April, pushing mortgage costs to 30-year highs for a median-priced home. As a result, first time homebuying dropped and the US homeownership rate inched up just 0.1 percentage points in 2023 to 65.9 percent, the smallest increase since 2016. The higher costs of homebuying have also hampered efforts to reduce racial disparities. As of the first quarter of 2024, the Hispanic (49.9 percent) and Black (46.6 percent) homeownership rates are significantly lower than that of white households (74.0 percent). “Households of color face other disadvantages, too,” says Daniel McCue, a Senior Research Associate at the Center. “Whether it’s the high downpayment or the monthly mortgage payments, the costs of buying a home have left homeownership out of reach to all but the most advantaged households.”