Uncertainty is clouding the housing market, and there is little indication that record levels of unaffordability will ease anytime soon. High home prices and interest rates have pushed home sales to the lowest levels in decades, high rents have left a record level of households cost burdened, and the nation has experienced a sharp increase in homelessness.
The State of the Nation’s Housing 2025 report from Harvard University’s Joint Center for Housing Studies (JCHS) paints a grim picture on the housing landscape in the country. Further, the report highlights that the current economic backdrop is contributing to the possibility of an economic downturn that could “significantly increase housing needs.”
“At this moment, when unprecedented numbers of households are unable to afford housing and the sector’s economic contributions are suppressed, there must be a concerted effort to do more to address the affordability and supply crises,” the report concludes. “The potential consequences of inaction are simply too harmful to the macroeconomy and the millions of households striving for a safe, affordable place to call home.”
In addition to the publication of the report, the JCHS hosted a webinar with industry stakeholders discussing the findings. Below are takeaways from the 2025 report and the accompanying webinar.
Housing Sales Hit 30-Year Low
In early 2025, home prices were 60% higher nationwide than in 2019 and were rising at an annual rate of 3.9%. As a result, the median existing single-family home price hit a new high of $412,500—five times the median household income—in 2024.
As prices rose, existing-home sales dropped to a 30-year low. New-home sales, however, increased by 3% in 2024. To combat affordability challenges, many builders have responded with incentives, fewer amenities, or smaller homes. The median size of a new single-family home declined for the third consecutive year in 2024 to 2,150 square feet, and many builders cut prices to help facilitate sales. The median price of a new single-family home fell to $420,300.
“[A data point that strikes] me is that home builders reported 86% of all new homes sold last year were detached single-family homes. Only 8% were attached homes like townhomes, and only 6% were condos,” Clark Ziegler, executive director of the Massachusetts Housing Partnership, said during the webinar announcing findings of the report. “We are really not doing a lot to diversify what is being built and what can be built at lower costs to serve more people.”
Costs to Homeowners, Renters Rising
Rising costs are increasingly leaving more homeowners cost burdened. In 2023, the number of cost-burdened homeowners rose by 646,000 to 20.3 million, accounting for 24% of all homeowner households. Rising home insurance premiums (57% higher in 2024 than 2019) and property taxes (which increased by an average of 12% between 2021 and 2023) are contributing to the weight of cost burdens on homeowners.
The report finds renters are also feeling the burden of costs. In 2023, the number of cost-burdened renters—those spending more than 30% of their income on housing and utilities—reached a record high of 22.6 million, or 50% of renters. Approximately 12.1 million—or 27%—of renters are severely burdened, spending more than half of their income on housing.
“High housing costs are a challenge to home buyers and a burden to homeowners. High costs are also a challenge for renters and soon to be a greater challenge given that markets are tightening,” said JCHS senior research associate Daniel McCue. “For the lowest-income households given these conditions, the need for housing assistance has never been higher.”
For renters earning between $30,000 and $44,999, the cost burden rate was over 70%; for renters earning $45,000 to $74,999, the cost burden rate was more than 45%.
“There are 2.5 million fewer units available for less than $600 a month than there were in 2013. There are 5 million fewer units available for between $600 and $1,000 a month than 2013. It is becoming increasingly hard to find apartments that rent for modest amounts,” said Chris Herbert, managing director at the JCHS.
With fewer households able to afford homeownership, the renter population increased by 848,000 in 2024. The demand is absorbing the new wave of multifamily rental units available. Massachusetts state Sen. Lydia Edwards shared the challenges facing renters in Boston as an example of the nationwide struggles highlighted by the report. The influx of student renters and renters moving back from the suburbs has made renting more unaffordable for working-class and immigrant families.
Developers completed 608,000 new units nationally in 2024, the most in nearly four decades. However, much of this construction was at the upper end of the market: the number of higher-rent units has increased dramatically while the number of lower-rent units has fallen substantially, according to the report.
“There is a lot of uncertainty in the market. You can’t make investment on uncertainty and unknowns,” John Barros, managing principal for Civitas Builders, said during the webinar. “The market has shifted to high-end, luxury rental units. There were more margins and a little more certainty.”
Homeownership Rates Fall
In 2024, the national homeownership rate fell for the first time in eight years to 65.6%. The downward trajectory continued through the first quarter of 2025, with a homeownership rate of 65.1%. The annual growth in the number of homeowner households dropped from 1.25 million in 2023 to just 613,000 in 2024. The largest decline in homeownership rates occurred in households younger than 25, dropping 1.4 percentage points in 2024.
Data indicates a buyer would need to possess $26,800 in cash to cover closing costs and a 3.5% down payment on a median-priced home or $95,000 in cash to closing costs and a 20% down payment. However, just six million of the nation’s nearly 46 million renters can meet this benchmark as well as afford to pay monthly mortgage payments that continue to rise.
Uncertainty Abounds
The short-term outlook for housing is linked to the overall economy and federal policy. As a result, the future is uncertain.
Builders estimate the impact of newly imposed tariffs will increase home prices by $10,900, and the reduction in immigration could shrink an already constrained labor pool. Reductions to federal staff and funding threaten to exacerbate the housing crisis further, the report finds.
“There must be a concerted effort to do more to address the affordability and supply crises,” Herbert said. “The potential consequences of inaction are simply too harmful to the macroeconomy and the millions of households striving for a safe, affordable place to call home.”
