Recently, Fox Business looked at the average cost of an American home over the past 80 years. Using data from the historical Census and Federal Reserve Economic Data (FRED), the article explores the ups and downs of the housing market and how inflation has impacted real estate.
You will also discover the adjusted cost for 2024 dollars, so you can better understand how housing prices have changed over time.
1940
In 1940, the average cost of a home in the United States was $2,938. Adjusted for inflation, the price in 2024 dollars would be $64,372.84. This means today’s prices are 21.91 times as high as the average price 80 years ago.
1950
During 1950, the average cost of a home in the United States was $7,354, according to U.S. Census data. This amount represented a significant increase from the average cost of a home in 1940. When adjusted for inflation, the average cost of a home in 1950 would be equivalent to $93,602.08 in 2024 dollars, as reported by FRED.
Since 1950, housing prices have increased by 12.73 times. These figures indicate that homeownership costs have risen significantly over the past several decades.
1960
In 1960, the average cost of a home in the United States was $11,900, equivalent to $123,320.18 in today’s dollars when adjusted for inflation, according to the Census. By 1963, the average cost of a home had risen to $19,300, equivalent to $193,470.52 in 2024 dollars.
This significant increase continued throughout the decade, with the average cost of a home reaching $27,000 by the end of the 1970s. When adjusted for inflation, this amounts to $213,457.27 in 2024 dollars, according to FRED.
During this time, the housing market experienced a considerable growth in sales. The rising cost of homes in the 1960s and 1970s significantly impacted the American housing market, making homeownership more difficult for many Americans.
1970
During the 1970s, the average cost of a home in the United States increased significantly. FRED calculations show an overall increase of nearly $50,000 from the beginning of the decade to the end. Between 1970 and 1975, the average cost of a home increased from $27,000 to $40,900, equivalent to $213,457.27 and $233,195.38 in 2024, respectively.
The largest increase occurred at the end of the decade, with prices reaching $74,200 in 1979, or $313,506.24 in today’s inflation-adjusted dollars. By the end of the decade, the average cost of a home in the U.S. was $72,200, or $305,055.94 with inflation adjustments in 2024.
1980
During the 1980s, the housing market experienced a significant surge in home prices. The average cost of a home increased from $73,600 at the start of the decade to $151,200 at the end of it. This jump represents an increase of $77,600 or 105% over the decade.
The largest increase in home prices occurred between 1984 and 1988, with an average increase of over $40,000. Adjusted for inflation in 2024 dollars, a house priced at $73,600 in 1980 would cost $273,986.72 today, while a dwelling listed for $151,200 would be $374,032.22 due to inflation, according to FRED reports.
These price increases impacted the housing market and potential homebuyers, making it more challenging for them to afford a home. Despite the increase in prices, the demand for housing continued to rise, leading to a significant increase in the overall value of the housing market during this period.
1990
In the second quarter of 1990, the average cost of a home in the United States was $151,200 without adjusting for inflation, according to Federal Reserve Economic Data (FRED). Adjusted for inflation in 2024 dollars, the average cost would be $354,858. Over the next five years, the market experienced fluctuations before surpassing the average cost noted above in 1994.
In 1999, the housing market peaked with an average cost of $204,800, not adjusted for inflation, as reported by FRED. Adjusted for inflation in 2024 dollars, the average cost would be equivalent to about $377,080, reflecting an increase of 84.12%.
2000
At the dawn of the new millennium, the average cost of an American home had decreased to $202,900, or $361,433, when adjusted for inflation, according to data from FRED. The housing market then experienced a steady increase for almost six years, except for a brief drop in 2004.
The market peaked in 2007, with homes costing an average of $322,100, equivalent to $476,521 in 2024. This was followed by the infamous stock market crash of 2008, which saw the median sale price for US homes experience its most significant drop in over a year.
From the beginning of 2008 until the start of 2009, the housing market dropped from $304,200 (or $433,399 in 2024 dollars) to $257,000, or $366,161 when adjusted for inflation, as reported by FRED using data from the US Census Bureau.
2010
In 2010, the average cost of homes in the United States was $275,300. Adjusted for inflation, this amounts to $387,277 in 2024. Over the next four years, the housing market experienced a steady climb, with the unadjusted inflation cost reaching $369,400 by the end of 2014, according to data from FRED.
By 2018, the average cost of a home had increased to $399,700, which amounts to $488,024 with inflation adjustments for 2024. However, over the next two years, there was a slight drop of nearly $30,000 before the market experienced a sudden surge due to the COVID-19 pandemic.
In 2020, the average cost of a home skyrocketed to $552,600, marking the largest spike in housing market history, according to FRED data. The pandemic played a significant role in this surge, which saw a jump of over $178,000 from the average cost in 2018.
2020
The U.S. housing market experienced a significant surge in 2020, which continued into 2022. According to FRED, the average cost of an American home in 2020 was $374,500. Adjusted for inflation in 2024, this price equals $443,860.
Over two years, the housing market saw an increase of more than $175,000. This surge was part of a trend that has been ongoing for over 80 years, with inflation consistently impacting the U.S. housing market since the 1940s.
By the end of 2022, the average cost of a home in the U.S. had peaked at $552,600, as per FRED research. The 2024 adjusted inflation cost for this peak is equivalent to $579,205.
What Do You Think?
How do you think the dramatic increase in the average cost of American homes since 1940 has impacted the traditional concept of the “American Dream”?
Does homeownership still represent the same values and achievements as it did in the past?
