Buying a Home Now Costs New Buyers 27% of Their Income as Barriers to Entry Keep Rising

The American dream now comes with a two-tier price tag, and breaking in is getting expensive. New buyers spent ~27% of income on housing in 2024, near pre-2007 bubble levels, while existing homeowners paid just 20%. That 7-point gap is the widest in decades, driven by pandemic price spikes and higher mortgage rates hitting first-time buyers hardest.

• New buyers are typically younger, earn less, and face significantly higher home prices than those already locked into mortgages.
• Housing costs go beyond mortgages, including insurance, taxes, utilities, and fees, making the true burden even heavier.

The frustrating part: The usual fix of cutting mortgage rates doesn’t really help new buyers. Lower rates mostly let existing homeowners refinance, while new demand pushes prices higher and wipes out the savings. EIG data shows that even when rates fell from 2019 to 2021, monthly payments for new buyers still rose. Supply-side moves like easing construction could help, but they work far more slowly than rate changes. The system adjusts, but new buyers still get squeezed.