With skyrocketing home prices and rising interest rates, it may seem impossible to buy a home. In fact, more than half (65 percent) of recent buyers regret purchasing their homes—with most concerns being financial in nature, according to the 2025 American Home Buyer Report by Clever Real Estate.
So if you’re thinking of jumping into the housing market, it’s important to take a close look at the numbers.
Median Home Prices Are Outpacing Wages
The median home price in the United States is $438,000, according to the latest data from Clever. With that price tag, you would need a median income of $123,226 to comfortably buy a house and cover the mortgage. However, the median income for Americans is $77,719.
So why are home prices so high? Part of the answer comes down to basic economics: supply and demand. When demand far surpasses supply, prices go up.
Homes are scarce right now. In fact, the United States is short by about 5 million homes in meeting current demand, according to an analysis by Manausa Real Estate. This is spurring fierce competition for the properties available. And it’s leading to bidding wars, with many homes selling above asking price. This makes it difficult for many to snag their dream home as others get the upper hand.
You may be wondering, why not just build more homes? That’s an issue, too. The rising costs of materials and labor are hitting developers hard. Sticky inflation has bled into the costs of construction materials like ready-mix concrete and drywall. Prices for these materials and others are still far above their pre-pandemic levels, according to research by the National Association of Home Builders (NAHB). And tariffs may also impact the costs of materials sourced overseas, although the impact of new tariffs is yet to be seen.
In addition, some existing homeowners tend to oppose new developments in their neighborhoods, further adding to construction hurdles.
Mortgage Rates Remain High
The average rate on a 30-year fixed-rate mortgage was 6.81 percent as of June 18, according to Fannie Mae data. Mortgage rates are indirectly influenced by the federal funds rate set by the Federal Reserve. And due to economic uncertainty, the Fed chose not to cut rates during its June 2025 meeting. It remains in a range of 4.25–4.50 percent. However, the Fed still expects to cut rates twice sometime in 2025.
And mortgage rates are expected to decrease in 2026.
“We expect the recent pullback in mortgage rates will provide a small boost to home sales this year,” Mark Palim, Fannie Mae senior vice president and chief economist, said in a March 2025 blog post. “While our latest forecast calls for a period of modestly slower economic growth, historically, interest rates have been the most important driver of home sales. We think mortgage rates will move even lower within the next quarter and ultimately close the year at approximately 6.3 percent, which could be low enough to generate some extra sales from any would-be buyers still waiting on the sidelines.”
However, these numbers on average are still higher than seen throughout the past decade.
It Goes Beyond Your Mortgage Payments
So you finally got the keys to your home. But what happens next? It’s eventually going to need repairs. And Uncle Sam is, of course, going to be knocking at the door. The costs of homeownership extend far beyond just making your mortgage payments. In fact, the average American homeowner spends more than $24,000 per year, in addition to their mortgage payment, on costs such as utilities, property taxes, and homeowners’ insurance, according to a report by Real Estate Witch.
Here’s how the report broke down typical annual home expenses.
- Utilities: $7,319
- Maintenance and repairs: $6,087
- Renovations: $5,762
- Property taxes: $3,057
- Homeowners insurance: $2,304
Getting a Better Rate
Despite the high costs of homes, there are ways you can improve your credit score to secure a better mortgage rate. You can start by getting a free credit report from each of the three credit bureaus: Experian, Equifax, and TransUnion. Check to see if there are any discrepancies to dispute.
It’s also important to stay on top of your bills and make at least the minimum monthly payments. This is because timely payments make up 35 percent of your FICO score. And keep an eye on how you use your credit card. Credit utilization—the amount of credit you’re using compared to your total available credit—is also a significant factor in determining your credit score.
Many financial advisers recommend you keep your credit-utilization ratio below 30 percent. And in the months leading up to signing up for a mortgage, avoid opening new loans or lines of credit. Applying for these typically requires a hard inquiry into your credit report, which could affect your credit score.
The Bottom Line
With skyrocketing home prices and high interest rates, it can be difficult to buy a home these days. There are also added costs such as property taxes and repairs. But by monitoring your credit and comparing different mortgage lenders, you could secure the best rate. But it ultimately comes down to your personal financial situation. If your budget doesn’t currently justify jumping into the housing market, it’s OK to wait.
The Epoch Times copyright © 2025. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
