Five years ago, a dual-income household earning the median U.S. income could still afford three core middle-class expenses on a single budget. A record-high Housing Affordability Index showed these families made 69% to 86% more than what was needed for a median-priced mortgage. New car payments averaged $563 a month, around 11% of median after-tax income, and full-time infant child care cost about $942 monthly, or 18% of take-home pay.
Today, things have already tightened. Wages are up 17.3% since 2020, but core living costs: food at home (+26%), shelter (+22%), and utilities (+18%), have risen faster. Middle-income households now spend around 60% of their after-tax income on housing, food, health care, and child care, up from 54% in 2019. If these trends continue, the buffer that once defined middle-class financial security could keep shrinking.
Now, here’s a closer look at 10 key costs that are eating away at the middle class.
#1: Mortgage
The median price of an existing single-family home reached $427,800 in May 2025, up nearly 50% from $284,600 in May 2020, even after mortgage rates doubled. Redfin’s 2024 year-end review called 2024 the second least affordable homebuying year on record. Households spent 41.8% of their income on housing.
According to the National Association of Realtors, the median homebuyer age jumped to 56 in 2024, up from 49 in 2023. HUD data show that most metro areas now fall below affordability benchmarks. Zillow found that the median value of entry-level homes hit $295,000 in 2024, up 78% since 2019. First-time buyers are getting priced out.
#2: Cars
The average price of a new vehicle hit $48,900 in June 2025, just below 2024’s record highs. Monthly payments now average $745, and $753 for prime borrowers, with typical loans stretching nearly 69 months. Over 20% of buyers take loans lasting seven years or more.
For middle-income households, the cost of a new base-model crossover now consumes up to 12% of pre-tax income, compared to 9% a decade ago. That’s before insurance, gas, or repairs. Analysts warn the new, warrantied car is fast becoming a luxury, forcing many families to stick with older vehicles or shift into the used market instead.
#3: Child Care
In 2024, center-based child care averaged $13,128 per child, up 29% since 2020, far outpacing inflation. For two children, costs now exceed mortgage payments in 45 states and rent in 49. Married couples spend 10% of their income on care; single parents, 35%, well above the federal 7% affordability benchmark.
With limited public support, families face harsh trade-offs: 27% reduced work hours, 19% took on debt, and 17% left the workforce. Another 35% tapped savings to keep up. High costs are reshaping American family life, forcing painful decisions that threaten long-term financial stability without bold investment in child care infrastructure.
#4: Travel
Post-pandemic, travel costs surged. Airfare dropped 7.4% in the past year, but hotel rooms cost 17% more than in 2019, and vacation rentals are up 44%–52% in high-demand areas. Gas averaged $3.16/gallon in July, but drivers in California and Hawaii often pay $4.50 or more. A typical road trip now runs about $190 in gas alone.
Nationwide, housing for vacations is 17%–30% costlier than pre-COVID. Only 46% of Americans plan to travel this year. Among those skipping summer trips, 65% cite cost, especially families earning under $100,000. Another bump in lodging or fuel could put road trips out of reach.
#5: Beef
Retail beef hit a record $8.15 per pound in January, with ground beef averaging $6.25, up 9.5% from 2024. The spike stems from the nation’s smallest cattle herd since 1951. The USDA reported just 86.7 million head, down 1% year-over-year. Global beef supply is expected to fall 1% this year, adding further pressure.
Rabobank projects a 500,000-ton production drop. At $13.33 for 2 pounds, ground beef reached a record in the American Farm Bureau’s July 4th survey. With supply tight and prices rising, families may start saving steaks and burgers for special occasions rather than weekly meals.
#6: Health Insurance
Employer-sponsored family health plans now average $25,572 annually, with workers covering $6,296 of that. Deductibles hover near $1,800 for individuals. Premiums rose 7% in 2024 and are expected to climb another 6%–7.7% in 2025, comparable to buying a compact car each year.
A 2024 JAMA study shows premiums have ballooned from 8% to nearly 18% of worker compensation since 1988, eroding wage gains. For lower-income families, this shift is especially painful. What was once considered a major employment benefit is now a significant financial burden, leaving many to question whether traditional employer-based coverage is still worth the cost.
#7: Homeowners Insurance
Homeowners insurance premiums have surged 24% since 2021, now averaging $3,303 annually. In Florida, average rates top $8,700, with some projections nearing $15,460 this year . ICE data shows a 61% jump nationwide since 2019, with premiums in cities like Houston reaching $6,370.
Major insurers are retreating from high-risk states, forcing homeowners onto state-backed plans or into costly, lender-imposed policies. Some self-insure, risking financial ruin. Climate-driven disasters, wildfires, hurricanes, floods, are destabilizing insurance markets, prompting experts to warn that affordable coverage is becoming a climate casualty. Without intervention, homeowners may face rising premiums, shrinking coverage, and housing insecurity in vulnerable regions.
#8: Electricity
Electricity prices jumped 28.5% from 2019 to 2024, with rates climbing from $0.14 to $0.18 per kilowatt-hour. Monthly utility bills now average $362, $4,344 annually, driven by rising energy costs and infrastructure investments. Providers like Con Edison and RG&E are seeking double-digit hikes, echoing global trends like South Africa’s Eskom.
Summer 2024 heatwaves pushed cooling demand up 37%, and summer 2025 bills are projected to average $178 monthly. As extreme weather and grid upgrades collide, power bills are edging toward rent-level burdens in many areas, straining household budgets and spotlighting the need for energy efficiency and long-term utility reforms.
#9: College Tuition
For 2024–25, average tuition and fees are $11,610 for in-state public universities, $30,780 for out-of-state, and $43,350 at private nonprofits. Net cost at public colleges averages $20,800, with net tuition around $2,480 after aid. Since 2005, college costs have more than doubled, outpacing both inflation and income growth.
Families earning $150,000 now contribute about 20% of their income, while those earning $200,000 may pay 30%. Though tuition hikes have slowed to 2–4% yearly, total attendance costs still pressure middle-income families. Without major aid, many must borrow heavily or draw from wealth to afford higher education, raising long-term financial risks.
#10: Medical Costs
The ACA out-of-pocket maximum climbs to $10,600 in 2026, up 67% from $6,350 in 2014, per the U.S. Department of Health and Human Services. Peterson-KFF data show these limits grow faster than wages. Milliman warns many Medicare users will exceed the new $2,000 Part D cap quickly, as specialty drug use rose 24% from 2023 to 2024.
One illness or costly prescription could shatter budgets. KFF finds 62% of Americans worry about paying medical bills, and half can’t cover an unexpected $500 expense. Rising costs threaten health insurance’s financial safety net.