The decline in housing savings is primarily driven by rising inflation, increased mortgage interest rates, and higher property-related expenses. These factors collectively strain household budgets, reducing the ability to save for housing goals.

Inflation has significantly impacted housing costs, with the U.S. Consumer Price Index (CPI) for housing exceeding 7% year-over-year in 2023, per the Bureau of Labor Statistics. This surge includes higher rent, utilities, and home maintenance expenses. Meanwhile, the Federal Reserve raised benchmark interest rates 11 times between March 2022 and July 2023, lifting the federal funds rate to 5.25%-5.5%, per the Federal Reserve Board. Higher mortgage rates increased average 30-year fixed-rate loans from 3% in early 2022 to 7.08% by late 2023, as reported by Freddie Mac. This raised monthly payments for existing borrowers and deterred new purchases, reducing savings for down payments. Additionally, property taxes rose 3.5% in 2023 to $3,395 per household, per the Tax Foundation, while insurance premiums increased 12% in 2022. Combined, these pressures eroded savings. For example, a borrower with a $300,000 mortgage at 7% pays $2,108 monthly versus $1,429 at 3%, consuming 50% more income. Simultaneously, rising home repair costs (up 6% in 2023) and energy expenses (up 24% since 2020) further diverted funds. These trends highlight how macroeconomic policies and market shifts directly reduce housing savings.