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Housing Is Beating Pay in Its Own Race for Affordability
To millions of Americans, the economy does not feel as good as the headlines claim. The explanation lies in simple math. Yes, incomes are higher than ever, but housing costs have soared far beyond pay raises. While the Social Security Administration’s national average wage index rose from $48,098.63 in 2015 to $55,628.60 in 2020, a compounded gain of around 15.7%, FHFA’s national house price series shows a compounded home price increase of 39.5%. Meanwhile, the national average wage increased by 25.6% between 2020 and the last year of official full-year data in 2024, while national home prices posted a compounded increase of 44.3% through the end of 2025.
This disparity helps explain why Americans today may not feel as well off as they should, despite having higher paychecks than they did before COVID. Pay is rising. According to the Social Security Administration, the national average wage index increased to $69,846.57 in 2024 from $55,628.60 in 2020. But housing costs have been rising even faster. According to FHFA, annual home price gains in those years reached 17.5% in 2021, 8.4% in 2022, 6.5% in 2023, 4.5% in 2024, and 1.8% in 2025. In other words, prices are no longer soaring, but they remain on a much higher plateau than they did before the housing boom that followed the COVID period.
Rents have also increased significantly, although their growth rate is lower than what was seen between 2021 and 2023. According to Zillow, the average asking rent in January 2026 was $1,895, a year-over-year increase of 2.0%. In addition, rent forecasts include a single-family rent growth estimate of 1.8% and a multifamily rent growth forecast of 0.6% in 2026. So while rent growth is lower than it was during the worst post-COVID years, it is still positive, even with greater rental availability and higher vacancy rates.
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On the wage side, the picture does not look as strong as some would prefer. According to Mercer, the average merit increase budget stands at 3.2% and the total salary increase budget at 3.5% in 2026. WTW agrees with that outlook, with salary increase budgets also at 3.5%. The Conference Board also sees salary budget increases averaging 3.4% in 2025 and the same in 2026. In other words, raises are still happening, but companies are no longer under pressure to keep pace with the labor shortage in the way they were before. This makes it harder to close the affordability gap between housing and wages.
In essence, the housing issue is a long-standing one, and COVID merely magnified a problem that was already serious. According to the data, before COVID, home prices rose by 23.8 percentage points more than wages from 2015 to 2020. Then, in the post-COVID period, home prices increased by 18.7 percentage points more than wages. In both cases, the gap widened. The later period saw slightly less widening only because wage growth improved, not because housing prices fell. As far as homeownership is concerned, the level of housing prices remains the crucial metric, and it is far higher today than it was before.
What the Charts Show
The first chart displays indexed annual change since 2015. It shows how home prices steadily pulled away from wages, especially from 2020 onward. The second chart compares the two major time periods analyzed above. As it clearly shows, home prices increased much more than wages in both periods. Together, the charts illustrate the growing affordability problem. Even though paychecks have grown, housing prices have moved faster. These charts are based on data published by the Social Security Administration and FHFA.
Figure 1
Figure 2
The problem is not that wages never increased. They did. The problem is that housing costs increased even more, and they continued to do so in the post-COVID period. At the same time, rents continue to rise, even if more slowly, and 2026 salary increase budgets point to moderate raises for most employees. As a result, the American consumer faces pressure from both sides. Housing is expensive, renting is still costly, and pay increases have leveled off.
Sources: Social Security Administration National Average Wage Index, FHFA House Price Index reports and releases, Zillow rent reports, Mercer, WTW, and The Conference Board.