High Housing Costs to Suppress U.S. Birth Rates Amid Affordability Challenges

High housing costs in the U.S. are projected to contribute to a decline in birth rates in 2026. According to real estate brokerage Redfin, although housing affordability is expected to improve moderately next year due to income growth outpacing home price increases for the first time since the Great Recession, homeownership will remain out of reach for many Americans, particularly younger generations. This persistent unaffordability is influencing family planning decisions and fertility trends. Research links birth rates with housing security, with many prospective parents citing homeownership as a key milestone before having children. The challenges young adults face in securing affordable housing, compounded by elevated home prices, mortgage rates, property taxes, and homeowner insurance premiums, have stalled homeownership rates among Gen Z and millennials. Data from 2024 shows homeownership rates for these groups essentially flat compared to previous years. The median U.S. home sale price remains significantly higher than pre-pandemic levels, inflating overall housing costs. Redfin terms the upcoming year as 'The Great Housing Reset,' indicating modest affordability gains that are insufficient to bring many young families into the housing market. Consequently, alternative housing arrangements such as multigenerational living or shared households are becoming more common among younger Americans. This housing affordability dynamic coincides with the U.S. fertility rate reaching a historic low of under 1.6 children per woman in 2024, well below the replacement level of 2.1. Analysts predict this trend will persist alongside continued housing challenges, reinforcing the link between housing market conditions and demographic shifts. In summary, elevated housing costs act as a barrier to homeownership and family formation, with significant implications for demographic trends and market demand. The persistence of these conditions underscores the complex interplay between economic factors, housing policy, and population dynamics in the U.S.