03-07-2025
Housing Market Hits Troubling Milestone for First Time in Nearly 20 Years
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Buying an entry-level home in the U.S. now costs more than twice as much per month as renting, according to a new study by John Burns Research and Consulting (JBREC)—showing that the housing affordability gripping the country is far from easing up despite rising inventory.
It is the first time in nearly 20 years, since 2006, that the monthly cost of owning an entry-level home is more than double the average apartment rent in the country—a grim reminder of a time when the U.S. housing market was on the cusp of collapsing.
Why Is Homeownership So Expensive Now?
According to JBREC, an entry-level home is defined as one in which the price band is at the lower end of the spectrum. They usually offer first-time homebuyers the best opportunity to step on the property ladder.
The cost of owning an entry-level home was calculated by researchers as including a 5 percent down payment, a 30-year fixed-rate mortgage, interest, taxes and insurance, plus any maintenance work—which can range from 0.85 percent to 1.25 percent of the home price.
Considering that mortgage rates are still hovering around the 7 percent mark, it is easy to understand the challenges facing first-time homebuyers. As of June 26, according to Freddie Mac, the average 30-year fixed-rate mortgage—the most popular among American homebuyers—was at 6.77 percent, down by only 0.09 percentage points from a year earlier.
Modern new homes under construction in Portland, Oregon.
Modern new homes under construction in Portland, Oregon.
Getty Images
Meanwhile, home prices are still growing, even as sales are falling in the face of longstanding affordability challenges—including rising homeowners association (HOA) fees and home insurance premiums. According to Redfin, the median sale price of a single-family home in the U.S. in May was $462,206, up 0.5 percent from a year earlier.
The rental market, on the other hand, is much more affordable. The median U.S. asking rent dropped 1 percent year-over-year in May to $1,633, according to Redfin, as more supply gave tenants more power to negotiate. In a city like Austin, Texas, where there has been a surge in new multi-family construction over the past five years, asking rents were down by 9 percent—the lowest level since 2021.
Currently, the JBREC analysis found, the national cost of owning an entry-level home is 101 percent higher than renting an average apartment. The gap has been growing since the pandemic: in 2020, owning cost 39 percent more than renting; in 2021, 44 percent more; in 2022, 78 percent more; in 2023, 93 percent more; and in 2024, 97 percent more.
For the first time since 2006, purchasing an entry-level home costs more than twice as much per month as renting. 🫥 — John Burns Research and Consulting (@JBREC) July 2, 2025
JBREC researchers project that this gap will shrink in coming years, all the while remaining historically high, with the cost of owning an entry level home estimated as 91 percent higher than renting in 2026, 93 percent in 2027 and 95 percent in 2028.
Plummeting Confidence in the Future
JBREC announced the result of its findings on social media, where it asked users when they think owning a home would once again feel affordable for buyers in the U.S.
A majority of the roughly 450 people who voted (42.1 percent) said, "not anytime soon." About 30 percent believe that homeownership may become affordable again in three to five years, while 16.3 percent said it might happen within two years. Roughly 12 percent said it won't be the case before 2031, at least.
Americans are just as pessimistic about the affordability of housing in the U.S. in the present. Homeowners' calls to lawyers about foreclosure have reportedly soared to a five-year high, with a recent LegalShield survey showing that more than 70 percent of homeowners and prospective buyers worry about a potential recession hitting the country in the coming months.
These fears could bring about a further slowdown in demand in the housing market, which might finally bring down prices. According to Redfin, home prices will drop by a modest 1 percent by the end of 2025.
