Those who have ventured into the housing market in the past four years have had a markedly different experience than buyers in the previous decade. In the past few years, buying a home has become much more expensive for the typical North Carolina household. Homeowners who bought before 2021 locked in mortgages with historically low interest rates and have benefited from substantial equity gains brought about by pandemic-induced supply shocks and increased savings.
But despite cheap loans no longer being a reality for homebuyers, demand for homes remains strong, driven by major life events such as forming households, relocating for work or adjusting to changing lifestyle needs.
Buying a house stands apart from all other consumer purchases. Among its distinctions, homes are exceptionally long-lasting and infrequently bought. The median ownership tenure in the United States exceeds 10 years, and the typical household buys only two to three homes in a lifetime1. Timing matters a great deal for a home’s total cost. From the beginning of 2022 to the end of 2025, the mortgage payment and property tax on the median home in North Carolina rose from around 20% to 30% of the state’s median household income (see Figure 1).
Why are costs rising so sharply for new buyers? In our recent Insight on housing affordability, we highlight the “double trouble” of rising home prices and elevated interest rates in the postpandemic era. Since 2022, total expenses going to both interest and principal payments have increased as a share of median income. The interest component has surged more than other home costs, climbing from around 5% to more than 15% of income for North Carolina’s typical household in 2022, and it has remained near this level since then. While this homeownership model was common for much of U.S. history, it marks a stark shift from the low-interest conditions that characterized the housing market of the 2010s.
Yet the increasing cost of capital is not the only reason homeownership has become so expensive. Home values in North Carolina also began rising rapidly in 2021, which has led to escalating property taxes for both existing homeowners and new buyers. Statewide, nominal incomes generally kept pace with rising property tax burdens, which rose modestly from about 3.2% of income in 2019 to 3.7% in 2025. Yet these price and income figures vary considerably across the state. For instance, property taxes on the median-priced home equal about 8.8% of median income in Orange County, accounting for 18% of total homeownership costs. Meanwhile, the median Macon County household pays about 2.2% of income toward property taxes, representing only 5.4% of total housing costs.
Higher mortgage rates remain the dominant challenge, especially for first‑time buyers, who typically finance a larger share of the purchase. Households that can make larger upfront payments are more insulated from swings in mortgage rates. Because nominal incomes have mostly kept pace with home prices and property taxes, today’s market looks far more manageable for existing owners than for new entrants. That divergence shows clearly in who is buying: The National Association of Realtors revealed that the share of first-time homebuyers has fallen from about 50% in the post-Great Recession period to a record low of 21% in 2025. The median age of first-time buyers has also climbed to a record high of 40 years old1.
Looking ahead, homebuyers will be watching the Federal Reserve closely for potential relief. The median Federal Open Market Committee member currently projects 25 basis points of rate cuts in 2026, though projections vary significantly among members. Financial markets are pricing in no changes to the overnight rate, reflecting heightened uncertainty, as the economic effects of Middle East military actions are still largely unknown. A rate reduction would provide some breathing room for homebuyers, but it is safe to say that, for at least the foreseeable future, the cost of buying a home in North Carolina will not be as low as it was in the 2010s.
