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📂 Category: Home Ownership,Personal Finance
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Key takeaways
- Average monthly housing costs for homeowners with a mortgage rose to $2,035 in 2024, and average gross rent reached $1,487, exceeding the inflation rate.
- These costs represent 43% (homeowners) and 31% (renters) of median household income, both higher than the 28% recommended by financial experts for housing costs.
- A family 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 pre-tax monthly income on housing costs. But many US households are spending much more as rent, mortgage, and utility costs rise more quickly than wages. Even average housing expenses can quickly eat up 40% of your monthly income.
Find out if you’re spending too much on housing, plus ways to cut your monthly costs if you are.
Average cost of housing in the United States
Housing costs in the United States have risen significantly over the past few years. The average monthly cost for homeowners with a mortgage reached $2,035 in 2024, up from $1,960 (adjusted for inflation) in 2023. That’s a 3.8% increase, a bigger increase than the 3% rise from 2022 ($1,902).
The main 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 United States rose from $238,128 to $365,824, an increase of more than $125,000. This is also due to increases in insurance costs: the average annual cost of property insurance increased 5.3% from 2023 to 2024. High property tax rates and utility costs also increase the monthly cost of housing in the United States
Renters are not much better off than homeowners. The average gross rent in the United States, which includes the cost of utilities and fuel, rose 2.7% from 2023 to 2024, to $1,487. The increase in the average cost of contract leases (not including utilities and fuel) exceeded the rate of inflation.
Quick fact
As of September 2025, the average rent for all bedrooms and property types in the United States is $2,060.
The problem with rising housing costs
The sharp rise in the costs of 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.
Average weekly earnings for workers in the United States reached $1,196 in the second quarter of 2025, equivalent to about $4,784 per month or $62,192 per year. For someone earning this median wage, spending $2,035 on housing costs takes up to 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 family that spends a lot on housing costs doesn’t have much room in the budget for anything beyond mandatory expenses, such as health care, food, and child care. This leaves almost no ability to pay off debt, build an emergency fund, or save for long-term goals like retirement.
How much should I spend on housing?
The 28/36 rule suggests spending no more than 28% of your gross monthly 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 take on when deciding whether to extend credit.
If you followed this rule in your own budgeting, you would look at your salary before taxes or other deductions and try to spend only 28% of that on housing costs. Housing costs include rent or mortgage, homeowner’s or renter’s insurance, property taxes, and utilities.
| Recommended housing costs based on monthly income (28% rule) | |
|---|---|
| Total monthly income | Maximum monthly housing costs |
| $3000 | $840 |
| $4000 | $1,120 |
| $5000 | $1400 |
| $6000 | $1,680 |
| $7000 | $1,960 |
| $8000 | $2,240 |
| $9000 | $2,520 |
| $10,000 | $2800 |
Tips to reduce 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 a high cost of living, or if your income has changed significantly since you first moved, this may be the best option.
However, there are ways to lower your monthly rent or mortgage costs without having to move.
- Consider refinancing: If your mortgage interest rate is higher than current mortgage rates, consider contacting your lender to determine if refinancing makes sense. The Fed has been cutting interest rates intermittently since 2024.
- Sign a longer lease: If you rent instead of own, you know that landlords can raise your rent. If you plan to stay in the area for several years, committing to a longer term by signing a multi-year lease may reduce 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 one degree (hotter in the summer, cooler in the winter) can save up to 3% on your energy bills without changing the temperature significantly. Changing 7-10 degrees for eight hours a day can save 10%.
- Check your water and energy usage: Energy loss through doors and windows can significantly increase your utility costs. Caulking, window films, weather stripping and door sweeps are inexpensive ways to save on energy costs. And monitor your water use: Most municipalities charge separate fees for water (inflow) and sewer (outflow), so reducing the amount of water going down the drain will also reduce these utility costs.
- Shop around for insurance: If you’ve been using the same company for renter’s or homeowner’s insurance for several years, shop around before renewing your next policy, because you may find a lower rate.
Bottom line
Rising costs in the United States have made it difficult for families to keep monthly housing expenses at or below 28% of their income. Cost-cutting strategies include refinancing, finding a roommate or renter, and shopping for a new insurance policy. Additionally, making manageable changes to your electricity and water usage can help lower your utility bills.
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