Harvard Report: U.S. Housing Market Is Still Broken — Costs High, Supply Low

If you rent, own, or have ever dreamed of buying a home, this one's for you — and it's not exactly cheering news.

Harvard's Joint Center for Housing Studies just released its State of the Nation's Housing 2026 report, and the picture it paints is one of a market that's stuck in a painful rut. Costs are up, supply is still short, and the people who are supposed to be fixing it — particularly at the federal level — are falling far short.

Let's start with what's happening to demand. The number of new households formed each year — think: people striking out on their own, getting their first apartment, buying their first home — has dropped for three years in a row. It went from averaging about 2 million new households a year in 2021 down to just 1.1 million in 2025. That's not because people don't want their own space. It's because they can't afford it. Young adults especially are getting squeezed by weak job markets, student debt, and general economic anxiety. Many are doubling up with roommates or moving back in with family — not by choice.

For anyone trying to buy: home prices have jumped 54 percent nationwide since 2020. The median existing single-family home now costs nearly five times the typical household income — and the traditional rule of thumb for "affordable" has always been three times income. Mortgage rates have kept things frozen too; existing home sales are sitting at a 30-year low of just 4.1 million, and the national homeownership rate has actually declined two years in a row.

And it's not just the sticker price. Even if you already own a home, your monthly costs are climbing fast. Property taxes rose 31 percent between 2019 and 2025. Home insurance premiums? Up 72 percent over the same stretch — largely because climate-related disasters are making insurers nervous, especially in states like California, Florida, and Louisiana.

For renters, the picture is just as rough. Nearly half of all renter households — 22.7 million people — are spending more than 30 percent of their income on housing. That's the technical definition of "cost-burdened," meaning housing is eating into money that should be going toward food, healthcare, and savings. A quarter of renters are in even worse shape, paying more than half their income just to keep a roof over their heads.

Here's the supply-side gut punch: the number of apartments renting for under $1,000 a month has fallen by more than 7 million units since 2014. Meanwhile, higher-end units have surged. Builders aren't producing what most people actually need. And right now, 11 million extremely low-income renter households are competing for just 3.8 million affordable, available units.

So what's being done? Some governors, mayors, and local leaders are trying creative fixes — zoning reforms, new subsidies, tax incentives. But the report is pretty blunt: those efforts are patchwork. The researchers say only the federal government has the scale to truly close the gap. And right now, federal housing assistance is described as "profoundly underfunded" — even as the need keeps growing.

Bottom line: whether you rent, own, or are trying to get into the market, the math just doesn't work for most Americans right now. And there's no quick fix on the horizon.