Recent Buyers Face Steepest Mortgage Costs in Nearly 20 Years

Census Bureau says homeowners with mortgages now spend over 21 percent of income on housing, while rents have pushed past the federal affordability threshold.

A For Sale sign in Elkridge, Md., on Sept. 2, 2025. Madalina Kilroy/The Epoch Times

U.S. homeowners are facing the steepest mortgage costs in nearly 20 years, with monthly payments climbing faster than incomes and leaving many households devoting a greater share of earnings to housing, according to new Census Bureau data.

The Census Bureau’s annual American Community Survey, released on Sept. 11, found that the median monthly cost for homeowners with a mortgage rose to $2,035 in 2024, up from $1,960 the year before after adjusting for inflation. The increase of 3.8 percent outpaced both the previous year’s rise and the overall pace of inflation.

“One way we measure housing affordability is based on how much households spend on selected costs such as mortgage payments, insurance, taxes, utilities, and various fees,” Jacob Fabina, a Census Bureau economist, said in a statement. “In 2024, the median percentage of income householders with a mortgage spent on these costs was 21.4 percent, which points to an increased burden on homeowners.”

Household members who moved into their homes last year were especially hard hit. Their median monthly mortgage payment jumped to $2,225—the highest level in nearly two decades and 20 percent more than the payments faced by buyers just three years earlier. By comparison, the median payment across all mortgages nationwide was $1,521.

“However, home values kept rising for all homeowners, regardless of when they moved into their homes,” Fabina said in a note.

Rising Costs, Tight Supply

Even as borrowing costs have surged, home values continue to rise. Redfin reported on Sept. 11 that the median U.S. home sale price reached about $393,000 in early September, up 1.7 percent from a year earlier—the second-biggest increase since April. Analysts point to stagnant new listings as a key factor keeping competition stiff and inventory tight.

Mortgage rates have eased somewhat in recent weeks, providing modest relief. According to Redfin, the median U.S. monthly mortgage payment fell to $2,604 at the start of September—more than $200 below the record high reached in May. The daily average rate on a 30-year loan dropped to 6.28 percent this week, an 11-month low that boosted purchasing power by more than $20,000 from the midsummer.

“There’s not a flood of buyers now that mortgage rates are coming down, but I am seeing a trickle as some house hunters do the math and realize rates have dropped enough to fit a monthly payment into their budget,” Redfin Premier agent Kristin Sanchez said in a statement. “A lot of house hunters are waiting because they think mortgage rates will drop more when the Fed cuts interest rates in September.”

Rates, Demand, and the Fed

The Federal Reserve has held its benchmark rate at 4.25 to 4.5 percent since December 2024, keeping borrowing costs—including mortgages—elevated. A month ago, the daily average mortgage rate hovered near 6.85 percent, but it has since fallen by about half a percentage point. Redfin attributed the drop to weaker-than-expected labor market data and signals from central bank officials that rate cuts are imminent.

Data from the Mortgage Bankers Association (MBA) confirm that lower rates have stirred buyer activity. MBA reported on Sept. 10 that mortgage applications jumped 9.2 percent in early September, with refinance activity up 12 percent from the previous week.

“The downward rate movement spurred the strongest week of borrower demand since 2022, with both purchase and refinance applications moving higher,” Joel Kan, MBA’s deputy chief economist, said in a statement.

Meanwhile, the Census survey also showed that renters—not just homeowners—face rising costs. The median gross rent, including utilities, rose 2.7 percent to $1,487 in 2024, up from $1,448 a year earlier. Adjusted for inflation, renters spent about 31 percent of their income on housing, unchanged from 2023 but still well above the affordability benchmark of 30 percent.

The Department of Housing and Urban Development defines households that spend more than 30 percent of their income on housing as “cost burdened,” while those spending more than 50 percent are considered “severely cost burdened.”