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Home Price to Income Ratio - Updated Chart [1]

['Silvan Frank']

Date: 2025-05

Interpretation

Historically, the average cost of a house in the US has been around 5 times the yearly household income. However, during the housing bubble of 2006, this ratio exceeded 7. In other words, the average single-family house in the United States cost more than 7 times the US median annual household income.

The Case-Shiller Home Price Index is a widely recognized measure of the price level of existing single-family homes in the United States. Developed by Robert J. Shiller and Karl E. Case, it is considered the leading indicator of US residential real estate prices. The index is based on a scale of Jan 2000=100 and is multiplied by 1800 to approximate the average sales price of houses sold in the United States.

When assessing the affordability of a house, it's important to consider not only the price but also the interest rates on mortgages. The average 30-year mortgage rate in the US reached its peak in 1981 at 18.63% and gradually declined over the following 40 years. However, in early 2022, yields began to rise again, making homes less affordable, which subsequently led to a decline in real home prices.

Data Sources

Further Information

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[1] Url: https://www.longtermtrends.net/home-price-median-annual-income-ratio/

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