Executive Summary

The inaugural State of the Nation’s Housing report in 1988 noted that the majority of Americans were well housed and some conditions have improved since then. More than 40 million units have been built over the past three decades, accommodating 27 million new households, replacing older homes, and improving the quality of the nation’s housing stock.

Nevertheless, several challenges highlighted in the first report persist today. Homeownership rates among young adults are even lower than in 1988, and the share of cost-burdened renters is significantly higher, with almost half of all renters paying more than 30 percent of their income for housing. Soaring housing costs are largely to blame. The national median rent rose 20 percent faster than overall inflation between 1990 and 2016 and the median home price rose 41 percent faster. While better housing quality accounts for some of the increased costs, higher costs for building materials and labor, limited productivity gains, increased land costs, new regulatory barriers, and growing income inequality all played major roles as well.

  • Cost Burdens
  • Home Sales
  • Renters
  • Mobility
  • Homeownership
  • Nearly a third of U.S. households (38.1 million) paid more than 30% of their incomes for housing in 2016. More than half (20.8 million) are renters, and fully 80% of renters and 63% of owners making less than $30,000 are cost burdened.

  • Increases in the median sales price of existing homes have outstripped growth in median household income for six straight years. The price of a typical existing home sold in 2017 was more than four times the median income.

  • The number of renter households in the U.S. declined by more than 180,000 to 43.1 million in 2017. This was the first sign of slowing renter growth since 2004.

  • Residential mobility continued its long-term decline in 2017. 11% of the U.S. population changed residences in 2017, the lowest mobility rate on record.

  • The homeownership rate between black and white Americans is widening. Between 1994 and 2016, black homeownership rates increased just 0.3% while white rates rose 2.2%, widening the black-white gap to 29.2%.

Rising House Prices & Homeownership rate

The national homeownership rate ticked up in 2017 for the first time in 13 years, buoyed by growth in the number of homeowner households. Despite the ongoing rise in home prices, low interest rates have helped to keep monthly housing costs relatively affordable for new homeowners. Still, the upward climb of interest rates, limited inventory of homes for sale, and widespread increases in student loan debt raise important concerns about the ability of many potential buyers to access homeownership

HOUSEHOLD GROWTH LAGGING DESPITE STRONG ECONOMY

With its oldest members now in their late 20s and early 30s, millennials are forming new households in greater numbers and moving to different states in search of opportunity. At the same time, more than 10,000 baby boomers are turning 65 every day, raising the average age of US households. Although wealth is growing, homeowners and those at the top have captured most of the gains, leaving millions of households with little or no wealth. Going forward, immigration will become an increasingly large, albeit unpredictable, source of population growth and therefore housing demand.

CONTINUING CONSTRAINTS ON THE SINGLE-FAMILY MARKET

New construction, home sales, and housing prices ticked up modestly in 2017, but a slowdown in the multifamily sector and the rising costs of residential construction are preventing a stronger upturn in housing markets. Intense competition for the historically low supply of existing homes on the market has pushed up home prices in most metros, raising further concerns about affordability.

MULTIFAMILY CONSTRUCTION LEVELS OFF AS VACANCIES RISE IN HIGHER-PRICED RENTAL UNITS

More than 38 million US households have housing cost burdens, leaving little income left to pay for food, healthcare, and other basic necessities. As it is, federal housing assistance reaches only a fraction of the large and growing number of low-income households in need. Between the shortage of subsidized housing and the ongoing losses of low-cost rentals through market forces, low-income households have increasingly few housing options. Meanwhile, the rising incidence and intensity of natural disasters pose new threats to the housing stocks of entire communities.

AFFORDABILITY PRESSURES EASE BUT REMAIN WIDESPREAD

More than 38 million US households have housing cost burdens, leaving little income left to pay for food, healthcare, and other basic necessities. As it is, federal housing assistance reaches only a fraction of the large and growing number of low-income households in need. Between the shortage of subsidized housing and the ongoing losses of low-cost rentals through market forces, low-income households have increasingly few housing options. Meanwhile, the rising incidence and intensity of natural disasters pose new threats to the housing stocks of entire communities.

Media Info

Media Contact
Kerry Donahue
Associate Director of Communications
(617) 495-7640
kerry_donahue@harvard.edu

Press Release
Fact Sheet
Report Cover Image
1988 vs. 2018
Appendix Tables
Figure Data