Home prices in the United States have increased by more than $400,000 over the last five decades, according to new data.
As of the first quarter of 2024, the median home price was $420,800, per US Census data. In comparison, the median home value in 1945 was $20,200. This means home prices increased by $400,600 over the past five decades.
Adjusted for inflation in 2024 dollars, homes in 1965 cost $202,215-still less than half of today's median home price of $420,800.
Here's a look at how home prices have increased over the past 50 years (adjusted for inflation and listed by decade):
1965: $202,215
1975: $228,404
1985: $245,129
1995: $270,147
2005: $380,793
2015: $386,494
2024: $420,800
How Much Do Americans Need To Spend To Buy a Home?
In 1965, the median annual household income was $6,900, according to US Census Data. With the median home sale price of $20,200, Americans earning only a median income needed to spend three times their income on a home.
Today, the median annual household income is estimated to be $78,171, per data consulting firm Motio Research. With homes selling for a median price of $420,800, the typical median earner would need to spend a little over 5.3 times their income to buy a house.
Consequently, affording a down payment for a home can be a challenge today for potential buyers. First-time home buyers looking to make a 20% downpayment would need to earn a median income of $110,871 in most states, per a recent Bankrate analysis. Specifically, hopeful home buyers in the West and Northeast need the most income to afford a median-priced home.
Only 14 states require an annual income of less than $100,000 for potential buyers to afford a home. By region, aspiring homeowners in the Midwest and South need the least income to afford a home. Specifically, those looking to buy a home in Arkansas, Indiana, Kentucky, Mississippi, and Ohio need to earn between $63,000 to $65,000.
The housing affordability crisis in the US is caused by a combination of multiple factors, including elevated mortgage rates (which is at 7.09% for the 30-year mortgage as of May 9), rising home prices, and low supply in the housing market.
