The American Dream on Hold: Rising Housing Costs Push Families to the Brink

Photo byEmily Pandise and Jo Ling Kent

In Harrisburg, Pennsylvania, Erica Duvall faces a grim reality: keeping a roof over her and her 9-year-old daughter’s heads is becoming an "impossible" feat. Despite earning more than she ever has, the single mother is falling behind as rent hikes and inflation outpace her paycheck.

"I make the most money I've ever made... and it's still not enough to keep up," Duvall said. Her rent increased by $100 when she renewed her lease in December, and she fears another hike this winter. "When you’re working as hard as some of us do and still can’t stay on top of it, it’s really hard not to ask why you’re working so hard,” she added.

Erica’s struggle is far from unique. According to Harvard University's Joint Center for Housing Studies, while rent growth has recently slowed, it's still up 26% since early 2020. The Census Bureau reports that nearly half of all renters—21 million households—are cost-burdened, meaning they spend more than a third of their income on rent. Add inflation on essentials like groceries and car insurance, and many Americans are forced to choose between paying rent and covering other critical bills.

"It's hard to budget when [the price of] everything is constantly changing," Duvall lamented.

A Widening Divide: Where You Live Shapes Your Housing Costs

Housing costs in the U.S. vary greatly depending on location. Urban areas like New York and San Francisco remain notoriously expensive, while Southern cities like Austin and Jacksonville have seen rent decreases as new housing developments boost supply . In contrast, rents in the Northeast and Midwest have surged by over 10% in the past year due to tight housing inventories.

For first-time homebuyers, the situation is equally daunting. New parents Eli and Amanda Enav had hoped to purchase a home in 2022 after years of saving. But with both interest rates and home prices at record highs, the couple remained stuck on the sidelines. "We were waiting for prices to come down or interest rates to drop. Neither of those things have happened," Eli said.

Home prices have risen 29% since 2020, with the average home price jumping from $331,807 to $429,324, according to data from Realtor.com . And the homes themselves are shrinking—since 2019, the average home has lost 126 square feet, while prices continue to soar.

Though mortgage rates have recently dipped from a peak of 8% to around 6%, many families still find themselves priced out of the market . Faced with a growing family and tight living quarters, the Enavs decided to make the leap, purchasing a home in New Jersey—at a higher price than anticipated. "It's going to be more of a burden than we originally thought," Amanda said.

A National Housing Crisis

At the heart of America’s housing crisis is a historic shortage of available homes. The nation was short 4.5 million homes in 2022, a number that’s only grown since . Daryl Fairweather, chief economist at Redfin, attributes the crisis to a decade of under-building. “We built fewer homes in the 2010s than in any decade going back to the 1960s. Millennials, the largest generation, are now seeking homes, and we simply didn’t build enough for them,” Fairweather explained .

This shortage has left millions of Americans questioning the attainability of homeownership. A CBS News poll revealed that 32% of voters aged 18 to 29 and half of those aged 30 to 64 feel they may never achieve the American Dream of owning a home. Among younger voters, 82% believe it is harder to buy a home now than for previous generations .

Rethinking the American Dream

As housing becomes less affordable, Fairweather predicts a shift away from traditional single-family homes, especially in urban areas near jobs. “That kind of home is not going to get more affordable,” she said. “We’ll see more smaller homes, townhomes, multiplexes, and condos become the new norm as they become more accessible and affordable” .

For many Americans, this shift represents a fundamental change in the idea of homeownership. As traditional homes become increasingly out of reach, the dream of a house with a white picket fence may no longer be the symbol of stability it once was.