When it comes to the cost of living, housing is one of the biggest expenses most people have. This article looks into data surrounding housing and income in the U.S. to see just how much homeowners and renters are spending on housing as a percentage of their income.
The latest data shows that the average amount American households spend on housing per month is $1,784, or $21,409 per year. This makes up 25.3% of their total income based on average annual earnings of $84,352 before taxes, and 34.9% of the total household annual expenditure of $61,334. [1] Consumer Expenditure Survey (Accessed September 2022) https://www.bls.gov/news.release/cesan.nr0.htm
Housing expenditure increased by 3.5% in 2020 compared to the previous year, with the main increase being on owned properties rather than rented properties. This was mainly due to increases in mortgage interest rates, property taxes, and other housing-related expenses.
| Expense | Percentage change from 2019 to 2020 |
|---|---|
| Mortgage interest and charges | +7.3% |
| Property taxes | +9% |
| Insurance and other expenses | +14.8% |
Source: [1] Consumer Expenditure Survey (Accessed September 2022) https://www.bls.gov/news.release/cesan.nr0.htm
There are a number of things that come with paying for housing, aside from just rent or mortgage payments. Let’s take a look at the main expenses that can be included with housing costs.
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Download our guideWhen it comes to renting property, gross rent is the amount of rent stipulated in a lease. As rent is usually paid in monthly installments, the gross rent is the combined amount of monthly payments. According to the Statista Research Department, the figures as of May 2022 show that 40% of renters paid gross rent which was 35% or more of their total income. At the other end of the scale, 13.4% of renters spent less than 15% of their income on gross rent.
Source [2] Gross Rent as a Percent of Household Income (Accessed September 2022) https://www.statista.com/statistics/186732/gross-rent-as-a-percent-of-household-income-in-the-us/
When it comes to renting a house or apartment, the costs can vary from state to state, let’s take a look at the median monthly rent costs for each state to compare the differences across the U.S.
The state with the lowest median rent is North Dakota, at $831 per month, followed by West Virginia at $899 per month.
The highest median rent cost was in Hawaii, where a month’s rent costs an average of $2,850, the second highest rent cost was California, at $3,000 per month.
| State | Median Rent |
|---|---|
| Alabama | $1,461 |
| Alaska | $1,489 |
| Arizona | $2,195 |
| Arkansas | $1,235 |
| California | $3,000 |
| Colorado | $2,250 |
| Connecticut | $1,485 |
| Delaware | $1,610 |
| Florida | $2,575 |
| Georgia | $1,999 |
| Hawaii | $2,850 |
| Idaho | $2,073 |
| Illinois | $1,650 |
| Indiana | $1,395 |
| Iowa | $1,026 |
| Kansas | $1,056 |
| Kentucky | $1,250 |
| Louisiana | $1,395 |
| Maine | $1,875 |
| Maryland | $1,844 |
| Massachusetts | $2,900 |
| Michigan | $1,335 |
| Minnesota | $1,537 |
| Mississippi | $1,410 |
| Missouri | $1,300 |
| Montana | $1,800 |
| Nebraska | $1,186 |
| Nevada | $2,150 |
| New Hampshire | $1,930 |
| New Jersey | $2,200 |
| New Mexico | $1,595 |
| New York | $3,400 |
| North Carolina | $1,850 |
| North Dakota | $831 |
| Ohio | $1,300 |
| Oklahoma | $1,400 |
| Oregon | $1,854 |
| Pennsylvania | $1,525 |
| Rhode Island | $2,150 |
| South Carolina | $1,775 |
| South Dakota | $1,025 |
| Tennessee | $1,860 |
| Texas | $1,886 |
| Utah | $2,000 |
| Vermont | $1,900 |
| Virginia | $1,997 |
| Washington | $2,195 |
| West Virginia | $899 |
| Wisconsin | $1,100 |
| Wyoming | $1,100 |
Source: [3] Average Rent by State 2022 World Population Review (Accessed September 2022) https://worldpopulationreview.com/state-rankings/average-rent-by-state
For those looking to stop renting and buy their first house, the average down payment across the U.S. for a first-time home buyer is $12,274, but the most difficult states to save for a first home are Florida, California and Hawaii. This is due to rising costs and average salaries not meeting monthly expenditure.
Recent data on mortgage payments shows that a monthly payment on a 30-year mortgage costs 36.2% of the median household income in the U.S. [4] How Much Homeowners Spend on Housing (Accessed September 2022) https://www.blackknightinc.com/black-knights-may-2022-mortgage-monitor/
That’s an increase from 23.8% at the end of 2021, and the highest share of income spent on mortgage payments since 2007.
Household incomes and house prices vary by state across the U.S. depending on a number of economic factors. We’ve broken down the average household income against median house prices for each state to see how they compare.
The highest median house price is in Hawaii, at $848,926, which would cost 7.91x the average household income of $107,348. Hawaii also has the highest income-to-house price ratio of all 50 states.
The state which has the lowest median house price is West Virginia at $129,103. The states with the lowest income-to-house price ratio are West Virginia where a median-priced house costs 1.98x average income, Iowa with a rate of 2.28x income, and Oklahoma at 2.31x income.
| State | Average Household Income | Median House Price | Multiple of median income to house price |
|---|---|---|---|
| State Alabama | Average Household Income $71,964 | Median House Price $194,695 | Multiple of median income to house price 2.71x |
| State Alaska | Average Household Income $98,811 | Median House Price $312,988 | Multiple of median income to house price 3.17x |
| State Arizona | Average Household Income $84,380 | Median House Price $416,433 | Multiple of median income to house price 4.94x |
| State Arkansas | Average Household Income $69,357 | Median House Price $169,867 | Multiple of median income to house price 2.45x |
| State California | Average Household Income $111,622 | Median House Price $760,800 | Multiple of median income to house price 6.82x |
| State Colorado | Average Household Income $100,933 | Median House Price $559,838 | Multiple of median income to house price 5.55x |
| State Connecticut | Average Household Income $115,337 | Median House Price $343,687 | Multiple of median income to house price 2.98x |
| State Delaware | Average Household Income $92,308 | Median House Price $337,543 | Multiple of median income to house price 3.66x |
| State Florida | Average Household Income $83,104 | Median House Price $358,018 | Multiple of median income to house price 4.31x |
| State Georgia | Average Household Income $85,691 | Median House Price $295,159 | Multiple of median income to house price 3.44x |
| State Hawaii | Average Household Income $107,348 | Median House Price $848,926 | Multiple of median income to house price 7.91x |
| State Idaho | Average Household Income $77,399 | Median House Price $466,435 | Multiple of median income to house price 6.03x |
| State Illinois | Average Household Income $95,115 | Median House Price $253,433 | Multiple of median income to house price 2.66x |
| State Indiana | Average Household Income $76,984 | Median House Price $210,166 | Multiple of median income to house price 2.73x |
| State Iowa | Average Household Income $80,316 | Median House Price $183,418 | Multiple of median income to house price 2.28x |
| State Kansas | Average Household Income $82,103 | Median House Price $198,199 | Multiple of median income to house price 2.41x |
| State Kentucky | Average Household Income $72,318 | Median House Price $188,439 | Multiple of median income to house price 2.61x |
| State Louisiana | Average Household Income $73,759 | Median House Price $205,972 | Multiple of median income to house price 2.79x |
| State Maine | Average Household Income $78,301 | Median House Price $344,592 | Multiple of median income to house price 4.40x |
| State Maryland | Average Household Income $114,236 | Median House Price $390,608 | Multiple of median income to house price 3.42x |
| State Massachusetts | Average Household Income $115,964 | Median House Price $559,312 | Multiple of median income to house price 4.82x |
| State Michigan | Average Household Income $80,803 | Median House Price $225,324 | Multiple of median income to house price 2.79x |
| State Minnesota | Average Household Income $96,814 | Median House Price $323,515 | Multiple of median income to house price 3.34x |
| State Mississippi | Average Household Income $65,156 | Median House Price $157,828 | Multiple of median income to house price 2.42x |
| State Missouri | Average Household Income $78,194 | Median House Price $218,208 | Multiple of median income to house price 2.79x |
| State Montana | Average Household Income $76,834 | Median House Price $428,202 | Multiple of median income to house price 5.57x |
| State Nebraska | Average Household Income $82,306 | Median House Price $230,672 | Multiple of median income to house price 2.80x |
| State Nevada | Average Household Income $84,350 | Median House Price $434,832 | Multiple of median income to house price 5.16x |
| State New Hampshire | Average Household Income $101,292 | Median House Price $411,945 | Multiple of median income to house price 4.07x |
| State New Jersey | Average Household Income $117,868 | Median House Price $441,762 | Multiple of median income to house price 3.75x |
| State New Mexico | Average Household Income $70,241 | Median House Price $277,617 | Multiple of median income to house price 3.95x |
| State New York | Average Household Income $105,304 | Median House Price $382,663 | Multiple of median income to house price 3.63x |
| State North Carolina | Average Household Income $79,620 | Median House Price $296,021 | Multiple of median income to house price 3.72x |
| State North Dakota | Average Household Income $85,506 | Median House Price $266,763 | Multiple of median income to house price 3.12x |
| State Ohio | Average Household Income $78,797 | Median House Price $199,959 | Multiple of median income to house price 2.54x |
| State Oklahoma | Average Household Income $74,195 | Median House Price $171,057 | Multiple of median income to house price 2.31x |
| State Oregon | Average Household Income $88,137 | Median House Price $502,215 | Multiple of median income to house price 5.70x |
| State Pennsylvania | Average Household Income $87,262 | Median House Price $254,597 | Multiple of median income to house price 2.92x |
| State Rhode Island | Average Household Income $92,427 | Median House Price $412,897 | Multiple of median income to house price 4.47x |
| State South Carolina | Average Household Income $76,390 | Median House Price $269,186 | Multiple of median income to house price 3.52x |
| State South Dakota | Average Household Income $77,932 | Median House Price $277,809 | Multiple of median income to house price 3.56x |
| State Tennessee | Average Household Income $76,937 | Median House Price $276,963 | Multiple of median income to house price 3.60x |
| State Texas | Average Household Income $89,506 | Median House Price $289,896 | Multiple of median income to house price 3.24x |
| State Utah | Average Household Income $94,452 | Median House Price $544,868 | Multiple of median income to house price 5.77x |
| State Vermont | Average Household Income $83,767 | Median House Price $336,310 | Multiple of median income to house price 4.01x |
| State Virginia | Average Household Income $106,023 | Median House Price $358,447 | Multiple of median income to house price 3.38x |
| State Washington | Average Household Income $103,669 | Median House Price $595,732 | Multiple of median income to house price 5.75x |
| State West Virginia | Average Household Income $65,332 | Median House Price $129,103 | Multiple of median income to house price 1.98x |
| State Wisconsin | Average Household Income $82,757 | Median House Price $251,655 | Multiple of median income to house price 3.04x |
| State Wyoming | Average Household Income $83,583 | Median House Price $308,862 | Multiple of median income to house price 3.70x |
Sources [5] Average Household Income by State (Accessed September 2022) https://worldpopulationreview.com/state-rankings/average-income-by-state [6] Median Home Price by State (Accessed September 2022) https://worldpopulationreview.com/state-rankings/median-home-price-by-state
Across the U.S. the home price to median income ratio has changed over time. The end of 2005 saw the peak of the housing bubble which eventually led to the financial crisis of 2008/09. The lowest point was in 2012 when the house price to median income ratio hit 4.73.
Since then, the ratio has gradually increased up to a high of 7.58 in 2022, surpassing the initial peak of 2005.
The graph below shows the house price to median income ratio in the January of each year.
Source [7] Median Home Price to Income Ratio https://www.longtermtrends.net/home-price-median-annual-income-ratio/
The term ‘housing cost burden’ is used to describe households that are paying more than 30% of their total income towards housing costs. In more extreme circumstances, households contributing more than 50% of their income to housing costs are said to be severely cost-burdened.
In the table below, we can see the percentage of owner-occupied households in the U.S. which are housing cost burdened, and the percentage of renter-occupied households that are housing cost-burdened.
In every state, the data shows that renting households have a higher proportion of cost burden compared to owned households. Almost all of the states have a renter housing cost burden of more than 40%, aside from Wyoming (35.5%) and North Dakota (39.3%). Florida is the state with the highest housing cost burden among renters at 56.8%, the lowest is Wyoming at 35.5%.
In owner-occupied households, the proportion of housing cost burden is below 40% in every state. The state with the lowest homeowner cost burden is Indiana with 18.3%, whereas the highest is California with 37%.
| State | Percentage of Owner-Occupied Households with Housing Cost Burden | Percentage of Renter-Occupied Households with Housing Cost Burden |
|---|---|---|
| Alabama | 21.5% | 47.5% |
| Alaska | 28.6% | 41.9% |
| Arizona | 25.8% | 47.9% |
| Arkansas | 21.6% | 43.3% |
| California | 37% | 53% |
| Colorado | 28.1% | 50.3% |
| Connecticut | 30% | 50.3% |
| Delaware | 26.2% | 49.8% |
| District of Columbia | 24% | 45% |
| Florida | 33.2% | 56.8% |
| Georgia | 24.6% | 50.7% |
| Hawaii | 36.5% | 56.4% |
| Idaho | 26.2% | 42.9% |
| Illinois | 25.8% | 45.9% |
| Indiana | 18.3% | 44.6% |
| Iowa | 18.7% | 42.9% |
| Kansas | 19.6% | 43.1% |
| Kentucky | 21.1% | 43.5% |
| Louisiana | 24.1% | 51.2% |
| Maine | 24.6% | 48% |
| Maryland | 25.8% | 49.5% |
| Massachusetts | 29.7% | 49.1% |
| Michigan | 22.2% | 48.5% |
| Minnesota | 22.1% | 46.1% |
| Mississippi | 24.6% | 49.8% |
| Missouri | 20.8% | 44.9% |
| Montana | 31.2% | 48.3% |
| Nebraska | 21.2% | 42% |
| Nevada | 31.1% | 51.3% |
| New Hampshire | 26.8% | 42.3% |
| New Jersey | 33.2% | 50.5% |
| New Mexico | 28.2% | 52.4% |
| New York | 32.9% | 51.1% |
| North Carolina | 23.8% | 45.9% |
| North Dakota | 22.8% | 39.3% |
| Ohio | 20.5% | 43.2% |
| Oklahoma | 22.3% | 44.2% |
| Oregon | 30.2% | 51.3% |
| Pennsylvania | 24.1% | 46.7% |
| Rhode Island | 30.7% | 48.1% |
| South Carolina | 25.6% | 50.9% |
| South Dakota | 20% | 40.7% |
| Tennessee | 23.2% | 45.6% |
| Texas | 26.5% | 48.9% |
| Utah | 23.7% | 42.2% |
| Vermont | 26.5% | 49.4% |
| Virginia | 23.5% | 46.1% |
| Washington | 28.6% | 48.4% |
| West Virginia | 20% | 49.5% |
| Wisconsin | 21.6% | 43.7% |
| Wyoming | 28.1% | 35.5% |
Source [8] Housing Cost Burden for Homeowners and Renters https://www.prb.org/articles/u-s-housing-cost-burden-declines-among-homeowners-but-remains-high-for-renters/
The general advice when it comes to spending on housing is to spend no more than 30% of your gross monthly income on your housing costs - that’s income before taxes and other deductions. A more conservative figure would be to spend no more than 25% of your income on housing. [9] How Much of Your Income You Should Spend on Housing https://www.cnbc.com/2021/07/14/how-much-of-your-income-you-should-spend-on-housing.html
For renters, this amount will include utilities, and for homeowners, that should include property taxes, maintenance and other home-ownership-related costs. As we mentioned earlier, 60.7% of renters currently spend more than 25% of their income on gross rent.
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