Household income stagnates as home prices soar
Despite a robust economy and low unemployment, household income hasn't changed much in the past 20 years.
- Median household income was $63,179 in 2018, statistically unchanged from 2017, according to Census data released in September.
- On an inflation-adjusted basis, households are making only 2.7% more than in 1999.
- “Most families have just barely made up the ground lost over the past decade,” Economic Policy Institute senior economist Elise Gould said at the time.
Meanwhile, large numbers of Americans are paying significant portions of their income on rent as housing costs have outpaced growth in wages.
- Home prices grew at a slower rate in 2019 than they did in 2018, but a shortage of housing inventory is driving price increases even in U.S. markets touting affordability like Phoenix and Tampa.
What to watch: Annual median home prices are expected to increase by 3.6% in 2020 and by 3.5% in 2021, according to a National Association of Realtors forecast.
The bottom line: “Real estate is on firm ground with little chance of price declines,” said Lawrence Yun, the group's chief economist, in a release.
- “However, in order for the market to be healthier, more supply is needed to assure home prices as well as rents do not consistently outgrow income gains," Yun said.