Key Takeaways
- Median monthly housing costs for homeowners with a mortgage rose to $2,035 in 2024, and median gross rent reached $1,487, outpacing the rate of inflation.
- These costs are 43% (homeowners) and 31% (renters) of the median household income, both higher than the 28% that financial experts recommend for housing costs.
- A household earning $5,000 per month ($60,000 per year) before taxes should aim to spend no more than $1,400 on monthly housing costs (rent or mortgage, property taxes, insurance, and utilities).
Financial experts recommend spending no more than 28% of your monthly pre-tax income on housing costs. But many households in the U.S. spend far more as the costs of rent, mortgage, and utilities rise faster than wages. Even average housing expenses can quickly eat up 40% of your monthly income.
Find out whether you are overspending on housing, plus ways to lower your monthly costs if you are.
Average Cost of Housing in the U.S.
Housing costs in the United States have risen significantly over the past few years. The median monthly cost for homeowners with a mortgage reached $2,035 in 2024, up from $1,960 (adjusted for inflation) in 2023. That’s an increase of 3.8%, which is an even bigger increase than the 3% rise from 2022 ($1,902).
A major reason for this increase is the rise in real estate prices. From January 2019 to January 2025, the average cost of buying a home in the U.S. rose from $238,128 to $365,824, an increase of more than $125,000. It’s also due to increases in insurance costs: the median annual cost of property insurance rose 5.3% from 2023 to 2024. Rising rates of property taxes and utility costs also increase the monthly cost of housing in the U.S.
Renters aren’t faring much better than homeowners. Median gross rent in the U.S., which includes the cost of utilities and fuel, rose 2.7% from 2023 to 2024, reaching $1,487. The increase in the median cost of contract rent (not including utilities and fuel) outpaced the rate of inflation.
Fast Fact
As of September 2025, the average rent for all bedrooms and property types in the U.S. was $2,060.
The Problem With Rising Housing Costs
The sharp rise in the cost of both renting and owning a home over the past few years means that housing costs are eating up more and more of the average household budget.
The median weekly earnings for workers in the U.S. reached $1,196 in the second quarter of 2025, which equals about $4,784 per month or $62,192 per year. For someone earning this median wage, spending $2,035 on housing costs uses up 43% of their monthly budget. For renters paying a median rent of $1,487, the cost of housing would be 31% of their monthly income.
A household that spends too much on housing costs has little room in the budget for anything beyond mandatory expenses, such as healthcare, food, and childcare. This leaves almost no ability to repay debt, build an emergency fund, or save for long-term goals such as retirement.
How Much Should I Spend on Housing?
The 28/36 rule suggests spending no more than 28% of your monthly gross income on housing costs and no more than 36% on debt. Lenders use the 28/36 rule to calculate how much additional debt a borrower can afford to take on when deciding whether to extend credit.
If you follow this rule in your own budget, you would look at your pay before taxes or other deductions are taken out and try to spend only 28% of that on housing costs. Housing costs include your rent or mortgage, homeowner’s or renter’s insurance, property taxes, and utilities.
| Recommended Housing Costs Based on Monthly Income (28% Rule) | |
|---|---|
| Gross Monthly Income | Max Monthly Housing Costs |
| $3,000 | $840 |
| $4,000 | $1,120 |
| $5,000 | $1,400 |
| $6,000 | $1,680 |
| $7,000 | $1,960 |
| $8,000 | $2,240 |
| $9,000 | $2,520 |
| $10,000 | $2,800 |
Tips for Lowering Housing Costs
Moving to a much smaller home may seem like the only way to lower your monthly mortgage or rent payments. If you live in an area with high living costs, or if your income has significantly changed since you first moved in, this may be the best option.
However, there are ways to lower your monthly rent or mortgage costs without moving.
- Look into refinancing: If your mortgage has a higher interest rate than current mortgage rates, consider contacting your lender to determine if refinancing makes sense. The Federal Reserve has been cutting rates intermittently since 2024.
- Sign a longer lease: If you rent rather than own, you know that landlords can raise rent. If you’re planning on staying in the area for several years, committing to a longer term by signing a multi-year lease might lower your monthly rent or help you negotiate smaller increases.
- Consider a roommate or renter: Sharing living expenses with someone can significantly lower your monthly housing costs, whether you’re a renter or a homeowner.
Housing costs also include utilities and insurance, and reducing these expenses can have an immediate impact on your monthly spending.
- Change the thermostat: Adjusting your thermostat settings by as little as one degree (hotter in the summer, cooler in the winter) can save up to 3% on your energy bills without significantly changing the feels-like temperature. A 7-10 degree change for eight hours a day can provide a 10% savings.
- Check your water and energy usage: Energy loss through doors and windows can significantly increase your utility costs. Caulk, window film, weather stripping, and door sweeps are inexpensive ways to save on energy costs. And monitor your water usage: most municipalities have separate charges for water (inflow) and sewer (outflow), so minimizing the amount of water that goes down the drain will also lower these utility costs.
- Shop around for insurance: If you’ve been using the same company for your renter’s or homeowner’s insurance for several years, shop around before your next policy renewal, because you might find a lower rate.
The Bottom Line
Rising costs in the U.S. have made it challenging for households to keep their monthly housing expenses to 28% or less of their income. Strategies to keep costs down include refinancing, finding a roommate or renter, and shopping around for a new insurance policy. Additionally, making manageable changes to your electricity and water usage can help lower your utility bills.
