| Chart of the Day |
| OCTOBER 4, 2026 |
COST OF LIVING • HOUSING |
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| The Median Home Now Costs 5.1 Years of Income. In 1980, It Was 3. |
| Mortgage rates hit 7.28% this week. Your grandkid just got priced out a little more. |
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| Ratio of median U.S. home sale price to median household income, selected years. |
| Source: NAR, Census Bureau, FRED, 2026 |
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| Seven months ago, mortgage rates dipped below 6%. Buyers started calling their agents. A little optimism crept back in. Then the war with Iran pushed energy prices up, Treasury yields followed, and this week Freddie Mac reported the 30-year fixed rate at 7.28%... the highest since late 2023 and the sixth straight weekly increase. |
| Most people look at that number and think, “Rates are high, but they’ll come back down.” Maybe. But the rate is only half the problem. The other half is what homes cost relative to what people earn. And that ratio has been broken for years. |
| Look at the chart. In 1980, the median home sold for about 3.0 times the median household income. That meant a family earning $17,700 could buy a $53,100 house. Stretch a little, save up, and you were in. By 2005, right before the housing bubble popped, that ratio hit 4.7. Everyone agreed that was crazy. Then it came back down after the crash... and climbed right past it again. The 2022 peak was 5.8. Today, even after a small pullback, we are sitting at 5.1. |
| Now here’s the part that really gets me. The monthly payment on a median-priced home was about $1,700 in early 2020. Today, according to Harvard’s latest housing report, it’s roughly $3,100. To afford that payment, a household needs an income above $120,000 a year. The median household earns about $84,000. So the typical American family is priced out of the typical American home. |
| If you bought your house 20 or 30 years ago, you’re sitting pretty. Your equity has done better than most stock picks. But think about your kids and grandkids. They’re not looking at the same country you bought into. Prices up 54% since 2020, rates above 7%, and incomes that haven’t come close to keeping up. That’s not a market waiting to correct. That’s a generation locked out. |
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