Housing affordability in the United States is a major economic challenge

The American Dream has shifted from an attainable milestone to a distant goal. According to a recent Bright MLS consumer survey, nine out of ten Americans believe housing affordability is a serious problem that crosses age, income, and regional lines. 

So why, precisely, has housing become so unaffordable? The answer isn’t just one statistic or a simple cause, but rather a blend of economic, demographic, and policy forces that make buying or renting a home difficult for many people.

Wages Have Not Kept Pace with Home Prices

One of the clearest themes emerging from the Bright MLS survey is that many Americans feel incomes simply aren’t high enough to match housing costs. More than 55% of respondents said household income levels haven’t kept pace with home prices, making affordability a budget problem more than a policy puzzle. 

This response is supported by national housing data: home prices in many markets don’t match up with incomes. Research from the National Association of Home Builders has shown that in contrast to earlier decades when median home prices tended to track more closely with median incomes today’s average household often must earn significantly more just to qualify for a mortgage without exceeding conservative lending criteria like keeping monthly housing costs below 30% of income.

When incomes lag behind price growth like this, affordability worsens. Middle-class buyers feel squeezed out first, but even upper middle-income households feel pressure because the entry point into homeownership itself has risen dramatically.

Mortgage Rates Increase Monthly Payments Even on Modest Homes

After more than a decade of historically low interest rates, mortgage rates jumped sharply over the past few years. According to Market Watch, the effect on monthly housing costs can be dramatic: a 30-year mortgage at a mid-6% rate results in mortgage payments that are hundreds of dollars higher than a similar loan at even 3.5%. While rates have eased somewhat from pandemic-era highs, they remain elevated compared with historical norms and according to Market Watch, borrowers still feel it. 

According to the Bright MLS consumer data, about 50% of survey respondents said higher mortgage rates were a major barrier to affordability. High rates don’t just increase monthly payments; they impact the ability of sellers to trade up because their existing mortgage is cheaper, they have less incentive to sell. That phenomenon, often called a “rate lock-in,” tightens inventory even more.

Lack of Lower-Priced Housing Stock

While consumers in the Bright MLS survey emphasized wages and mortgage costs, many also pointed to a lack of homes being built at prices most buyers can afford. Over 40% of respondents said too few affordable homes are being constructed. 

This complaint aligns with broader national data showing that housing construction has not kept up with demand for decades. According to a Washington Post article titled, “Why nobody really knows the scale of the U.S. housing crisis”, America is facing a serious housing shortage. Moody’s estimates it would take more than 2 million new homes to resolve the problem, Brookings puts the number at 5 million and Republicans in Congress say the shortfall is closer to 20 million. 

The reasons for this deficit aren’t simple: local zoning laws and rising costs for labor and materials contribute to a market where builders tend to build higher priced homes rather than a price range that is more affordable for first time buyers. 

Supply Shortages and Market Dynamics Still Matter

People don’t always identify supply constraints as the top problem, but housing scarcity in many markets added upward pressure long before interest rates became an issue.

According to research from Harvard’s Joint Center for Housing Studies, metro areas with rapidly growing populations such as San Francisco and New York have historically added housing stock more slowly than they add residents, increasing competition and bidding wars that drive housing prices up. 

Lack of supply also contributes to high rents, which makes it really difficult for people to save money to buy a home. In many cities, rental costs have risen faster than incomes, stressing renters and leaving less money available for down payments or savings.

Rising Costs Beyond the Mortgage

Housing affordability isn’t just about purchase price and monthly interest. Property taxes, homeowners insurance, and maintenance costs have also increased, in some cases significantly. As reported recently by The Guardian, some homeowners find that these costs alone are a big part of the household budget.

For renters, it’s difficult too. Research from Harvard’s Joint Center for Housing Studies finds that a large share of working-age renters struggle to cover basic living costs after paying rent, meaning that the threshold of “affordable” housing (traditionally defined as 30% of income) doesn’t meet real living standards. 

What Can Home Buyers Do 

Buying a home may feel daunting, and it’s completely understandable! But here are practical steps you can take to stay in control of the process and build your plan for long-term financial health. 

Separate your needs from your wants.

this means prioritizing location, layout, or long-term livability over cosmetic upgrades or a specific architectural style. Choosing a home that needs modest updates or expanding your search by just one or two neighborhoods can make a meaningful difference in price without sacrificing quality of life.

Focus on monthly affordability, not just the purchase price.

Property taxes, insurance, utilities, and maintenance all matter. A slightly lower price with higher taxes or HOA fees may cost more over time than a higher-priced home with lower carrying costs. Working with a lender who clearly explains loan options and running conservative numbers helps you avoid becoming “house-poor,” especially in uncertain economic conditions.

Have strong representation and make data-driven decisions.

Rely on accurate local market data, realistic offer strategies, and clear contract terms. You will be better positioned to avoid overpaying. This includes understanding when competition truly justifies aggressive pricing and when it doesn’t. In some markets, patience and timing can still create opportunities, particularly with homes that are overpriced or have been sitting longer.

Remember that homeownership is a long game, not a short-term win.

If you plan to stay in a home for several years, market fluctuations matter less than buying a property that fits your life and your budget. Staying informed, be strategic and focused on your needs or the non-negotiables for your home. Surrounding yourself with professionals who put your interests first can help you navigate today’s affordability challenges with confidence and clarity even in a difficult market.

Until these forces are addressed through wages that keep up with price growth, smart housing policy, and expanded supply, housing affordability will remain one of the biggest economic challenges of our time.

If you have questions about the national or local (DMV) housing market, please reach out. At HomeBuyer Brokerage, we advocate for home buyers. We believe in educating buyers so they make informed decisions.  

Sources:

• Why Is Housing Unaffordable? Bright MLS consumer survey results show low incomes, high mortgage rates, and supply constraints as top factors. https://www.brightmls.com/news
• Bright MLS: Consumers Say Low Incomes, High Rates and Lack of Supply Remain Major Affordability Constraints. https://www.rismedia.com/2026/02/02/bright-mls-consumers-say-low-incomes-high-rates-and-lack-of-supply-remain-major-affordability-constraints/
• Broader housing affordability trends & household income mismatch. https://www.nahb.org/-/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2025/special-study-households-priced-out-of-the-housing-market-march-2025.pdf
• Mortgage rate and affordability dynamics. https://www.marketwatch.com/story/dont-blame-jerome-powell-or-the-fed-if-you-cant-afford-to-buy-a-house-right-now-92b04c0f
• Rent burden and housing wage analysis. https://nlihc.org/oor/about
• Joint Center for Housing Studies https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2025.pdf
• Washington Post
• https://docs.google.com/document/d/1DalerayNWtwqSwyQZOKvs852y8VAexTIPA4Wli34uyM/edit?tab=t.0
• The Guardian https://www.theguardian.com/us-news/2025/feb/24/us-home-ownership-mortgage-interest-rates-insurance-premiums

‍

How can we help?

The exclusive buyer agents at HomeBuyer Brokerage specialize in serving home buyers. Please reach out with questions at info@homebuyerbrokerage.com.