A yearslong impasse in the housing market is hurting first-time buyers and families who want to upsize in a big way. For the 2024 year, the average annual cost of child care shot up to $13,128. Such a jump would be an astounding 13% increase over the last year. Escalating daycare and preschool expenses almost doubled the general inflation rate. This recent surge has redefined the picture and made it much more dangerous for American households. Millions of households have been radically affected by the growing cost of housing and childcare. The busy reality of these circumstances requires positive, robust answers to meet these needs’ hurdles.
New homes have not been built quickly enough to keep up with demand since the 2007-2009 housing crisis. Together, those factors have created a shortage of about four million homes in America today. This shortage has further deepened our affordability crisis, which is most felt in states that still have relatively low housing costs. The child care sector faces insurmountable challenges. These problems are due in part to insufficient government investment and wages for the people working in the industry.
Stagnation in the Housing Market
Since late 2022, U.S. home sales have flatlined—a direct result of higher mortgage rates and the market’s consequent state of paralysis. They’ve been stuck at an annualized rate of about four million. We’re at a virtual standstill for new home construction. As a consequence, millions of families can’t find the housing they need with the features they require, leading to a severe supply crisis.
Mortgage rates have jumped over 6%, a far cry from the pandemic-induced ultra-low mortgage rates. This spike has created a homebuying environment that’s increasingly out of reach for the majority of would-be homebuyers. In a recent piece, housing expert Chen Zhao highlighted the importance of this supply-affordability connection.
“The reason we have an affordability issue is a supply issue,” – Chen Zhao
Over 4 million homes, by some estimates, are required to repair our existing backlog of supply shortage alone. As a consequence, countless families are left walking a tightrope. Units available for rent or sale have fallen to a forty-year low. This underproduction is compounding the current crisis by making a tight housing market even more so.
In states such as Texas, Florida, and Georgia, housing is still very affordable. These states offer a relatively easier regulatory environment for builders, so it’s a natural drawing point for those looking to build affordable property.
The Rising Cost of Child Care
Child care costs have increasingly become a hefty weight on American families, with the costs rising dramatically. It’s not just the sticker price—the average annual cost soared to $13,128 in 2024, representing a record jump of over $3,000 in recent years. This increase in expenses has even outpaced inflation, putting a bigger financial burden on working families.
The child care workforce is in a similar crisis. In fact, wages for child care workers are lower than 97% of all other occupations in the U.S. This inequity creates significant challenges in recruiting and retaining skilled talents in this critical field.
“The child care workforce faces some systemic challenges that are attributable to the relative paucity of government support for child care in the United States,” – Gormley
This is a moment that families constantly have to wrestle with in terms of child care. Steve Mercer shared his family’s experience:
“We have a 16-month-old that we pulled out of child care, between a combination of a bad experience and the cost of it,” – Steve Mercer
Mercer noted that his wife now stays home to care for their child because they could not justify sending him back to daycare.
The unavailability of affordable child care choices has driven countless women—especially moms to young children—out of the work force. Women’s labor force participation rates plummeted in 2025, undoing progress made after the pandemic.
The Impact on Families and Future Generations
Soaring housing costs and skyrocketing child care expenses have collided to dishearten many families. Now they find it difficult to envision any route to getting back the American Dream. Younger generations are becoming increasingly dissatisfied with the economic environment. Not surprisingly, they feel homeownership and financial stability slipping further out of reach.
“I think for the younger generation, there’s discontent because there’s a sense that the American Dream is not achievable anymore,” – Zhao
Her perspective is the feeling of every family between pursuing their dreams and the harsh reality of living costs increasing.
“I went to college, I’ve worked my entire life, and with the costs of everything being what they are, we get by; we certainly don’t live luxuriously,” – Single mother (no name mentioned)
As families grapple with these intertwined crises, solutions will require comprehensive approaches that address both housing availability and child care affordability.
As families grapple with these intertwined crises, solutions will require comprehensive approaches that address both housing availability and child care affordability.