1/ A new look at housing affordability shows a striking shift. In the mid 1960s it took about 3.6 years of full time work to buy the median new home in the United States. Today it takes roughly 6.3 years. That is an increase of about 79 percent.
2/ The chart compares two key variables. The first is the median price of new homes. The second is average hourly earnings for production and nonsupervisory workers. By converting wages into annual work hours, we can estimate how many years of full time work would be required to equal the price of a home.
3/ Over time the gap between wages and housing prices has widened. Home prices have risen faster than hourly earnings, especially during housing booms in the mid 2000s and again in the early 2020s. The result is that workers today must commit far more labor time to achieve the same goal of home ownership.
4/ Remote work may be quietly amplifying this trend. As more workers gained the ability to work from anywhere, housing demand spread beyond traditional job centers. Smaller cities, suburbs, and even rural regions saw new waves of buyers competing for homes. This migration increased demand in many markets where housing supply was limited.
5/ The shift has both positive and negative implications. Remote work offers flexibility and allows workers to relocate to more affordable areas. At the same time, it can push housing prices higher in regions that previously had lower costs. Understanding how these forces interact will be important for housing policy and labor markets in the coming years.
Dataset
Data Sources
Federal Reserve Economic Data (FRED). Median Sales Price of Houses Sold for the United States (MSPUS).
https://fred.stlouisfed.org/series/MSPUS
Federal Reserve Economic Data (FRED). Average Hourly Earnings of Production and Nonsupervisory Employees, Total Private (AHETPI).
https://fred.stlouisfed.org/series/AHETPI
