2025 State of the Nation’s Housing report: Five key takeaways
The State of the Nation’s Housing 2025 report from Harvard University’s Joint Center for Housing Studies paints a troubling picture of record unaffordability for homeowners and renters alike.
Habitat for Humanity co-sponsored the report to bring greater attention to the urgent housing challenges impacting communities nationwide, and to elevate solutions that can help.
Below are five major takeaways that shed light on the current state of housing and its impacts on the communities we serve:
1. Millions of renters were priced out of homeownership as prices hit an all-time high.
The median price of a single-family home reached a record high of US$412,500 in 2024. To afford this, a potential homebuyer would need an estimated annual income of US$126,700 — more than 150% of median household income in 2024 (US$81,604).
Unaffordable home prices are no longer just confined to certain regions of the country. In more than half of all metro areas, a household now needs an income of at least US$100,000 to purchase a median-priced home.
Few renters can reach this bar. In 2024, just 1 in 7 renters (13%) had the income needed to buy a median-priced home, down from 1 in 3 in 2021.
The median price of a single-family home reached a record high of US$412,500 in 2024. To afford this, a potential homebuyer would need an estimated annual income of US$126,700 — more than 150% of median household income in 2024 (US$81,604).
Unaffordable home prices are no longer just confined to certain regions of the country. In more than half of all metro areas, a household now needs an income of at least US$100,000 to purchase a median-priced home.
Few renters can reach this bar. In 2024, just 1 in 7 renters (13%) had the income needed to buy a median-priced home, down from 1 in 3 in 2021.
The typical homebuyer in 2024 was older, more affluent and more likely to previously own a home. For first-time homebuyers, the median age was 38, a record high.
Rising home costs have particularly priced out Black and Hispanic buyers. In 2024, just 7% of Black renters, 1 in 14, and 11% of Hispanic renters, 1 in 9, could afford the median-priced home.
As housing prices rose, the nation’s homeownership rate dropped for the first time in eight years, falling to 65.1%. This was largely driven by a sharp decrease in homeownership among adults under 35.
3. Rental unaffordability and homelessness hit all-time highs.
Astonishingly, half of all renters — 22.6 million — faced unaffordable housing costs in 2023. More than a quarter (27%) were severely cost burdened, spending more than half of their income on housing. This included 83% of renters earning less than US$30,000. A shortage of affordable rentals is driving up demand and pushing prices higher. At the same time, high home costs limit homeownership opportunities, forcing many renters to stay in the market longer.
Homelessness also reached a record high in 2024, impacting 771,480 people. Of this total, approximately 150,000 people were chronically homeless.
Astonishingly, half of all renters — 22.6 million — faced unaffordable housing costs in 2023. More than a quarter (27%) were severely cost burdened, spending more than half of their income on housing. This included 83% of renters earning less than US$30,000. A shortage of affordable rentals is driving up demand and pushing prices higher. At the same time, high home costs limit homeownership opportunities, forcing many renters to stay in the market longer.
Homelessness also reached a record high in 2024, impacting 771,480 people. Of this total, approximately 150,000 people were chronically homeless.
4. New construction is needed to ease housing costs
The U.S. needs many more homes to meet the significant demand for housing and bring costs down to affordable levels. This is particularly evident in the homeownership space. Although the inventory of for-sale homes is slowly rising from the all-time low in 2022, homes remain scarce, putting significant pressure on prices.
The U.S. needs many more homes to meet the significant demand for housing and bring costs down to affordable levels. This is particularly evident in the homeownership space. Although the inventory of for-sale homes is slowly rising from the all-time low in 2022, homes remain scarce, putting significant pressure on prices.
Low inventory is fundamentally the result of years of underbuilding. Compounding the problem are high interest rates and limited move-in options, which leave homeowners with little choice but to hold onto their properties.
While new home construction grew modestly last year, many challenges remain in building affordable homes. These include zoning restrictions on smaller housing types, high materials costs, and high interest rates for construction loans.
5. Local and state housing policy reforms provide hope
Last year, more states and localities acted to increase the supply of affordable homes, expand homeownership access, and strengthen homeownership resilience. Habitat affiliates and affiliate support organizations played key advocacy roles in more than 100 of these successes. Some of the approaches used include:
Last year, more states and localities acted to increase the supply of affordable homes, expand homeownership access, and strengthen homeownership resilience. Habitat affiliates and affiliate support organizations played key advocacy roles in more than 100 of these successes. Some of the approaches used include:
Supply-oriented solutions were especially popular, as more communities acted to address high home prices by increasing inventory. Many local and state governments updated their zoning codes to allow less costly housing types, like duplexes, manufactured homes and smaller homes on smaller lots. Others reduced building costs by lowering permitting fees on affordable homes and increased their investment in affordable home construction.
Localities and states also took additional steps to broaden access to homeownership. For example, the Des Moines and Boston Federal Home Loan Banks offered new permanent rate buydowns to soften homebuyers’ high mortgage interest rates. Other communities expanded down payment assistance for first-time homebuyers, including Virginia’s new program for homebuyers earning no more than 60% of area median income.
Lastly, local and state governments made progress on homeownership resilience. States like Nebraska, New York, North Dakota and Wyoming reduced property tax cost burdens for lower-income homeowners. Other communities increased funding to help low-income homeowners make urgent home repairs. And a growing number of states are launching Fortified Roof programs, offering grants to help homeowners install wind-resistant roofs that boost resilience and reduce insurance premiums.
Conclusion
Continued action is needed at all levels of government to address the record level of housing unaffordability.
To rein in home prices and reverse the decline in homeownership, we must urgently pursue new solutions to increase the supply of affordable for-sale homes. This includes financial support for new construction as well as regulatory reforms to lower development costs.
Policymakers must also address other barriers that disproportionately leave some of us out of homeownership. One promising solution is expanding down payment assistance for low-income and first-generation homebuyers, helping those who are less likely to receive family support.
Additional action is needed to help older adults and other existing homeowners keep their homes amid rising costs. States and localities can help by investing in affordable home repairs, easing property taxes for low-income homeowners, and supporting roof fortifications and other resiliency measures that reduce insurance premiums and preserve homes.
Lastly, we urgently need housing solutions across the full housing continuum, including continued support for affordable rental homes and more homes with permanent supportive services for those experiencing homelessness.
Continuing momentum for these and other housing solutions, we can ease the burden of high living costs, ensure more people have a decent place to live, and create more opportunities for families to access homeownership and its many benefits, including financial independence.
Together, we can build brighter futures.
Continued action is needed at all levels of government to address the record level of housing unaffordability.
To rein in home prices and reverse the decline in homeownership, we must urgently pursue new solutions to increase the supply of affordable for-sale homes. This includes financial support for new construction as well as regulatory reforms to lower development costs.
Policymakers must also address other barriers that disproportionately leave some of us out of homeownership. One promising solution is expanding down payment assistance for low-income and first-generation homebuyers, helping those who are less likely to receive family support.
Additional action is needed to help older adults and other existing homeowners keep their homes amid rising costs. States and localities can help by investing in affordable home repairs, easing property taxes for low-income homeowners, and supporting roof fortifications and other resiliency measures that reduce insurance premiums and preserve homes.
Lastly, we urgently need housing solutions across the full housing continuum, including continued support for affordable rental homes and more homes with permanent supportive services for those experiencing homelessness.
Continuing momentum for these and other housing solutions, we can ease the burden of high living costs, ensure more people have a decent place to live, and create more opportunities for families to access homeownership and its many benefits, including financial independence.
Together, we can build brighter futures.
