TEXT JOIN TO 77022

Home Cost Increases Doubling Those of Americans’ Incomes

The current cost of a median-priced home has now reached a rate of increase that is twice as high as the increase in the average American household income.

As the Daily Caller reports, the median monthly home payment for the month of February was $2,838, a 12% year-over-year increase. Meanwhile, the median household income is currently at $84,072, an increase of just 6% compared to last year. While the average income rate has roughly been on par with the cost of a new home for the last decade, the drastic change began in early 2022, when the average household income needed for a new home hit its current median of $113,520 a year.

While housing prices have slightly moderated compared to a record-high in October, they remain unusually high; in October, the average rate for a 30-year mortgage was about 8%, compared to the current rate of 7%, according to the Federal Reserve Bank of St. Louis. Inflation, supply constraints, and increasing mortgage rates are all cited as contributing factors to the increasingly high average payments.

“For over a decade, America has been slowly marching toward a housing affordability crisis due to chronic underbuilding, and that crisis was kicked into overdrive when the pandemic homebuying boom fueled a meteoric rise in housing prices,” said Elijah de la Campa, a senior economist at Redfin and author of Redfin’s report detailing these increases. “Now there’s another culprit squeezing homebuyers: elevated mortgage rates. We’re slowly climbing our way out of an affordability hole, but we have a long way to go. Rates have come down from their peak, and are expected to fall again by the end of the year, which should make homebuying a little more affordable and incentivize buyers to come off the sidelines.”

Even as inflation has remained relatively high, home prices have risen higher than the rate of general inflation. The Case-Shiller National Home Price Index increased by 6% in January year-over-year, compared to a 5.6% increase in December. Inflation rose by 3.2% in February, surpassing the Federal Reserve’s expectations of a 2% increase.

In the latest attempt to combat inflation, the Fed set its federal funds rate to a new range of between 5.25% and 5.50%, the highest it has been in 23 years.

Get the news corporate media won't tell you.

Get caught up on today's must read stores!

By submitting your information, you agree to receive exclusive AG+ content, including special promotions, and agree to our Privacy Policy and Terms. By providing your phone number and checking the box to opt in, you are consenting to receive recurring SMS/MMS messages, including automated texts, to that number from my short code. Msg & data rates may apply. Reply HELP for help, STOP to end. SMS opt-in will not be sold, rented, or shared.

About Eric Lendrum

Eric Lendrum graduated from the University of California, Santa Barbara, where he was the Secretary of the College Republicans and the founding chairman of the school’s Young Americans for Freedom chapter. He has interned for Young America’s Foundation, the Heritage Foundation, and the White House, and has worked for numerous campaigns including the 2018 re-election of Congressman Devin Nunes (CA-22). He is currently a co-host of The Right Take podcast.

Photo: iStock/Getty Images

Start the discussion at community.amgreatness.com