U.S. Faces Worsening Housing Affordability Crisis Amid Rising Costs

The United States is confronting an escalating housing affordability crisis, driven by rising home prices, elevated mortgage rates, and recent tariff policies that have significantly increased construction costs.

A Reuters poll indicates that U.S. home prices are projected to rise by 3.5% annually through 2027, marking the slowest growth rate since 2011. Despite this deceleration, affordability remains a pressing issue. Mortgage rates have remained high, currently averaging 6.98%, which continues to strain affordability for potential homebuyers. (Reuters)

The U.S. Conference of Mayors highlights a housing shortage between 4 and 7 million homes, with the median monthly rental price increasing by 18% and the median purchase price for housing increasing by 21% over the past three years. Nearly 7-in-10 Americans report concern over rising housing costs. (Reuters)

President Donald Trump's administration has implemented significant tariffs on imported construction materials, notably doubling tariffs on steel and aluminum imports to 50%. These measures aim to protect domestic industries but have led to increased costs for builders. (Time)

The National Association of Home Builders (NAHB) reports that 74.9% of U.S. households are unable to afford a median-priced new home in 2025, priced at $459,826 with a 30-year mortgage rate of 6.5%. This translates to approximately 100.6 million households priced out of the market. A $1,000 increase in the median price of new homes would price an additional 115,593 households out of the market. (NAHB)

In April 2025, U.S. construction spending declined by 0.4%, marking the second consecutive monthly decrease. This downturn is primarily due to a 1.1% decrease in outlays for single-family housing projects, influenced by high borrowing costs and a surplus of unsold homes. (Reuters)

Carl Harris, NAHB Chairman, stated:

"Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices." (NAHB)

The rising costs make homeownership increasingly unattainable for a large portion of the population, potentially widening economic disparities. With homeownership out of reach for many, demand for rental properties increases, leading to higher rents and further financial strain on households. The slowdown in construction affects employment in the building sector and related industries, contributing to broader economic challenges.

The U.S. housing affordability crisis is a multifaceted issue influenced by rising home prices, high mortgage rates, a significant housing shortage, and increased construction costs due to recent tariff policies. Addressing this crisis requires a comprehensive approach involving policy adjustments, economic strategies, and industry collaboration to ensure accessible housing for all Americans.