Home prices and apartment rents continue to move up and beyond the grasp of low-income workers.
That’s the conclusion of the latest "Out of Reach" report from the National Low Income Housing Coalition, and it’s hardly a recent phenomenon. What NLHIC director of research Dan Emmanuel said people should realize is that the situation isn’t improving.
“Housing costs continue to be a problem,” he said. “The big takeaway is how remarkably consistent that is. It’s a longstanding problem.”
The annual report, now in its 35th year, finds even modest housing beyond the means of millions of Americans. As such, the group advocates for preserving and expanding federal and state assistance budgets.
Almost half are cost-burdened
Nearly half of the approximately 45 million renter households in the U.S. are cost-burdened, meaning they spend more than 30% of their incomes on housing costs including rent and utilities, according to the report. More than a quarter are considered severely cost-burdened, meaning housing takes up more than half of what they make.
The report identifies the new housing wage — the amount an individual needs to earn to afford a two-bedroom rental without being cost-burdened — as $33.63, up $1.52 from 2024. The salary for a one-bedroom rental is $28.17, up $1.43 year over year.
The average rent in the U.S. is $1,756 per month, up barely 1% from last year but more than 21% higher than 2019 levels, according to data from CoStar. Emmanuel said costs have moderated some after a meteoric rise following the pandemic but remain elevated.
Home prices are also up, with the national median price hitting a record high of $395,000 in June, according to Homes.com data. That’s $130,000 above where prices were the same time in 2019.
Though the report focuses on renters, high home prices constrain the supply of rental units, Emmanuel explained.
“When you have high home prices, it means more higher-income people are renting, and it puts more pressure on the rents,” he said. “Those two go hand in hand.”
Problem is worst at bottom
While high costs risk pushing people with modest incomes into cost-burdened territory, Emmanuel stressed that the biggest problems are found among extremely low-income households, defined as people earning below the federal poverty line. The poverty line currently stands at $15,650 a year for an individual and $32,150 for a family of four, or below 30% of their area’s median income.
“For them, the market cannot produce an adequate supply of units,” he said. “You cannot sustain a property at rent levels that are affordable for them.”
People in this category are forced “into older, poorly maintained units,” according to the report.
The report finds a deficit of 7.1 million affordable housing units and that the deficit is growing, not shrinking. Between 2012 and 2022, the U.S. lost 2.1 million rental homes with inflation-adjusted rents under $600 per month, according to the report.
Emmanuel said the current uncertainty in the economy is likely to worsen the problem. “There are some factors on the horizon we need to keep an eye on,” he said.
First, there is the question of whether tariffs issued by President Trump’s administration will raise the cost of building materials. The National Association of Home Builders, for example, notes that the Commerce Department is imposing 14.5% tariffs on Canadian lumber and has signaled that it plans to raise that rate later this year. Canada accounts for 85% of all softwood lumber imports, the association said.
Second, Emmanuel said he is also worried about the possibility of a recession. “Recessions have long, pervasive impacts on affordability for low-income renters,” he said. He said the number of cost-burdened renters rose after the Great Recession in 2008 and didn't come back down before the pandemic-caused downturn of 2020 pushed the number higher.
Even flat budgets hurt
“And then there’s what’s going on in Congress,” Emmanuel said of the elements he’s watching, specifically cuts to the Department of Housing and Urban Development.
Emmanuel said the thinking is entirely in the wrong direction.
“First thing to do would be to not cut housing assistance,” he said. “Even flat budgets are problematic. The budget has to increase every year to account for inflation. Rents increase every year, so we have to allocate more money.”
He would like to see housing assistance treated as an entitlement, like food stamps, which would mean every person who qualifies for assistance would receive it. As of now, only one in four people who meet the threshold for housing assistance gets help.
The country also needs to increase the supply of affordable units. The reconciliation bill, now known as the "One Big Beautiful Act," made permanent extensions to the Low-Income Housing Tax Credits for developers of affordable housing. The increases are expected to lead to more units being built.
Emmanuel said he appreciated the increases, though his organization did not support the bill because of cuts it made that he said would harm low-income renters overall.
But some of the most impactful changes could come from local governments rather than the federal one, Emmanuel said. Zoning and regulatory reform on the municipal level are needed to get the housing supply where it needs to be everywhere.
“That’s really the key to address housing costs higher up the income ladder,” he said. “Because the market should be able to serve those households, and it’s not doing it simply because we’re not allowing the housing to be built.”