Today’s homebuyers earn more than their parents did at the same age, yet buying a comparable house costs a record share of that income. That disconnect between rising paychecks and surging housing costs has widened to a point the Federal Reserve has never recorded in its flagship household survey.
The Federal Reserve’s 2025 Survey of Consumer Finances, released October 9, 2026, alongside its companion report “Changes in U.S. Family Finances from 2022 to 2025,” put the monthly mortgage cost on a median-priced home at about 33% of median family income.
The prior survey covered conditions through 2022, when that share stood at 26%, and the seven-point jump sets a record.
The squeeze extends beyond first-time buyers and hits hardest retirees who still have a mortgage balance or need to relocate on a fixed income.
Also Read: Fannie Mae updates its mortgage rate predictions for 2027
The rate surge behind the record mortgage burden
Rising interest rates drove the bulk of the deterioration in affordability between the two survey periods. The average 30-year fixed rate climbed from 4.2% to 6.7%, and on a standard loan that shift raises the cost of every dollar borrowed over the full repayment term, the Fed’s report found.
Real median family income grew 7% over the same stretch to $82,200, a new high in the survey’s history going back to 1989. That gain, while historically significant, fell short of offsetting the combined weight of higher borrowing costs and elevated home values.
The median home was valued at more than 4.5 times median family income in 2025, roughly matching the record ratio from the prior survey.
When rates hold near 7%, and prices stay at that multiple, the monthly payment exceeds what most middle-income families can manage alongside their other obligations.
Families who need to buy or move face the biggest cost increases
Roughly 66% of American families already own their homes, a share that has remained unchanged since 2022, according to the Federal Reserve.
The record affordability strain affects families who still need to finance a purchase or relocate, as well as retirees considering a downsize.
More on Housing:
- Skyrocketing housing costs put huge strain on homeowners and renters
- Homebuyers lose ground as housing affordability slams shut
- Landlords sound alarm as rental fraud costs renters big
The barrier is steepest for renters, whose median net worth stood at just $10,600, below the cash required for a standard 20% down payment on the median home. The share of families whose debt payments exceeded 40% of their income rose from 6.5% to 8.6%, the highest level since 2010.
For retirees considering a downsize, selling a home with a low-rate mortgage and financing a new purchase at current rates can push monthly payments above the original amount, even on a smaller property.
Housing costs consume a growing share of retiree budgets
The burden on older Americans extends beyond the mortgage and has been compounding for more than three decades.
Households aged 75 and older devoted about 39% of total spending to housing in 2024, compared with 34% for households aged 65 to 74, with the comparison also summarized by International Business Times.
Older retirees spent roughly $21,999 on housing, slightly below the $22,329 for households aged 65 to 74. Housing commands a larger budget share because spending on transportation, apparel and other categories drops sharply in later retirement, leaving fewer line items to dilute the proportion.
Laura Adams, a Nationally-Recognized Finance author and Member of the Board of Advisors at Forbes Advisor, told GOBankingRates that this pattern leaves baby boomers on retirement income especially exposed.
<strong>Housing is likely your largest expense if you’re a retired boomer on a fixed income,</strong>
She noted that elevated mortgage interest rates make purchasing a smaller home unrealistic for many retirees who assumed downsizing would reduce their monthly costs.
Inflation-adjusted housing spending among households 75 and older rose 68% between 1990 and 2024, from about $13,130 to $21,999. Over the same span, housing spending across the broader U.S. population rose 26%, making the retiree increase roughly 2.6 times the national pace, IBTimes reported.
How retirees can gauge whether housing is overtaking their budget
Older homeowners now account for the fastest-growing share of households squeezed by their homes, which puts a line-by-line review of monthly housing costs ahead of any downsizing move for anyone running the math.
Daniel McCue, a Senior Research Associate at Harvard University’s Joint Center for Housing Studies, said that owners 65 and older accounted for 1.7 million of the 3.6 million rise in cost-burdened homeowners between 2019 and 2023.
Insurance, property taxes, utilities and maintenance costs have risen sharply, putting pressure on retirees’ budgets even when their mortgages are fixed or fully paid off.
Federal housing policy classifies families paying over 30% of income on housing as cost-burdened and over 50% as severely burdened, with elderly households disproportionately represented, according to the Congressional Research Service.
The Federal Reserve’s Survey adds a leading indicator: the share of families behind on any loan payment jumped from 12% in 2022 to roughly 20% in 2025, the highest since 2010.
Fidelity Investments’ analysis notes many retirees overestimate housing costs. Steve Feinschreiber, senior vice president of financial solutions at the firm said retirees may be able to reduce housing costs by downsizing, moving to a more affordable area, or staying in their current homes, especially if they plan ahead.
Related: Goldman Sachs has a new warning for the housing market for 2027
