Despite ongoing wage increases that have outpaced inflation since the pandemic, a significant segment of the American population perceives increasing economic difficulty. This paradox arises because for many, the challenge is not solely the affordability of goods and services but their availability. Critical areas such as housing and child care have experienced prolonged supply constraints, limiting options and compounding the financial pressures on households.
Housing Market Stagnation and Supply Shortages
The U.S. housing market has remained relatively static for several years, hindering first-time homebuyers and confining expanding families to undersized residences. Contributing factors include high mortgage interest rates, which have climbed past 6%, triple their level from the immediate post-pandemic period, exacerbating the cost of purchasing a home.
Existing home sales have stabilized at an annual rate of approximately 4 million since late 2022. This level remains close to the lowest figures observed since the conclusion of the 2007-2010 housing crisis. Additionally, home inventory has consistently hovered near minimal levels, limiting buyer choices.
Compounding these dynamics is the lingering impact of the 2007-2009 construction halt, which prevented a rebound in new housing starts. Today, an estimated shortfall of nearly 4 million homes exists, according to Goldman Sachs Research, underscoring a substantial supply deficit. This shortage is reflected in unoccupied housing units, which are at their lowest in four decades.
Chen Zhao, who oversees economics research at Redfin, attributes affordability problems principally to supply issues. She highlights a geographic mismatch wherein the most economically vibrant regions, notably the New York metropolitan area and San Francisco, face significant regulatory and logistical challenges to building, tightening supply where demand is concentrated.
Kim Sheldon, a single mother and teacher residing in Holden, Massachusetts, exemplifies the challenges faced by many middle-class Americans. Having rented the same home for a decade, she recently observed nearby homes for sale priced around $650,000 for modest three-bedroom properties. Despite stable employment and modest lifestyle expectations, homeownership remains unattainable, prompting concerns about the financial risks associated with purchasing amidst high costs and her family’s needs.
Regions traditionally known for affordability, including parts of the Sun Belt like Texas, Florida, and Georgia, provide relatively more accessible housing markets due to fewer restrictions on new construction. Yet, these dynamics are evolving as workplace return-to-office policies encourage relocation back to urban cores, fleeting some of the previous migration-driven demand reductions. Even in these areas, elevated pricing and mortgage rates maintain barriers for prospective buyers. Steve Mercer, recently relocated to Atlanta from Iowa, notes limited supply compounded by hesitant sellers reluctant to relinquish ultra-low mortgage rates secured during the pandemic, leading to constrained market activity.
Notably, older generations largely benefited from purchasing homes under different economic conditions, acquiring property at lower prices with subsequently falling interest rates, effectively increasing wealth accumulation. In contrast, younger buyers encounter a market characterized by high entry prices and unsupportive interest rates, contributing to a pervasive feeling of exclusion from traditional markers of economic success.
Child Care Access: Cost, Availability, and Quality Challenges
While housing remains the largest expense for most American households, child care costs have surged to become comparable or exceed housing costs for growing numbers of families. In nearly every state, caring for two children in a licensed facility costs more than mortgage or rent payments. The average annual child care expense reached $13,128 in 2024, representing a 13% increase over the previous year according to Child Care Aware.
Beyond affordability, the child care sector faces systemic issues involving availability and quality. University of California, Berkeley, research highlights the financial challenges confronting operators, resulting in what experts describe as a "grim financial bind." Workforce shortages are further exacerbated by relatively low wages for child care professionals, which rank below 97% of all U.S. occupations, according to Georgetown University scholar William T. Gormley.
Steve Mercer reports a personal experience with these barriers after relocating from Iowa, where child care costs approached $1,800 per month for his young son. The cumulative strain led his wife to leave her job to provide full-time care, reflecting a difficult choice faced by many families unable to justify the expense and challenges of external child care.
The limited governmental support for child care contributes directly to labor force instabilities, forming "child care deserts" in various regions. The high and rising costs, nearly doubling the pace of overall inflation, impose relentless pressures on working parents, often forcing labor market withdrawals. The U.S. Census Bureau's Center for Economic Studies documented a decline in labor force participation among mothers in 2025, reversing prior post-pandemic progress, particularly among those with children under five years old.
Economic and Social Implications
The interconnected nature of limited housing and child care availability presents substantial obstacles to economic mobility. Rising costs and limited options restrict discretionary spending and complicate family planning decisions, while negatively impacting workforce participation. The resulting constraints are felt unevenly but broadly across demographics, contributing to pervasive economic unease despite nominal wage gains.
Addressing these entrenched supply limitations in major urban centers and across child care infrastructure remains critical for restoring affordability and economic opportunity to wider segments of the population.