Much has been said in the media about the cost of houses in the US. It has become one of the top subjects dominating Twitter conversations.
But the truth is that houses in the US are cheap, especially when you compare them to houses in other countries.
With a median home price of $454,900, the US has the cheapest houses in the developed world.
So if you are considering investing in the US real estate market or buying a home, it is time to shut out the noise and get on with it.
Sometimes when people talk about the costs of houses, they are fixated on the country’s expensive cities, such as San Francisco Bay Area, New York City, Hollywood, Honolulu, Los Angeles, and Seattle.
Still, when it comes down to that, houses in these cities are pretty cheap compared to places like Sydney, London, Tokyo, and Paris.
This article will examine the average home prices in the USA in 2022 and the cheapest state to buy a house. It will also analyze why houses are more affordable in the USA compared to other parts of the world and whether investing in American real estate is worth it.
What are the average home prices in the USA in 2022?
Based on the data published by the US Census Bureau and the Department of Housing and Urban Development, the average sales price of houses sold in September 2022 in the US was $517,700.
Housing costs in the US have been increasing rapidly for the past couple of years. In 2020, the average house price was $391,900. It rose to $453,700 in 2021—a 15.81% increase.
12 states with the highest average home prices in states in the United States
Here is a list of states with the highest average home prices, median household income, and cost of living index.
This is based on data from various sources, including US Census Bureau, World Population Review, and Missouri Economic And Research Center.
1. Hawaii
The Aloha State is made of beautiful beaches and beautiful scenery. No wonder houses in this state do not come cheap. It has the most expensive house prices in the country.
The cost per square foot is $649, while the average home price is $730,000. But they make up for it with the lowest property tax rate at 0.30%.
The median household income in Hawaii is $82,199, while the cost of living index is 186.0.
2. California
California is well known for having the highest house prices in the country. Perhaps because it is home to Hollywood and Silicon Valley. The cost per square foot is $468, while the average home price is about $683,000.
The prices of houses in this state have dramatically increased in recent years. As of 2015, the average California home costs $440,000. This was two and a half times the average national home price of $180,000.
Today, the price has almost doubled. The state has a cost of living index of 138.7, with a median income of about $78,627.
3. New York
New York, with an average home cost of about $331,000 and $925 per square foot, is the third state with the highest home prices.
Home prices in New York vary across the state. Some neighborhoods, such as Crown Heights, go as high as one million dollars, while others cost way less than that. The cost of living index in the state is around 135.7.
But it may not be so bad, with a median household income of $72,920.
4. Washington
Houses in the Evergreen state average at about $431,000 and around $313 per square foot.
But the median household income is $77,006, and a cost of living index of 114.0.
5. Massachusetts
The housing cost in Massachusetts is as high as they come. Dubbed the fourth most expensive state in the United States, the cost of living index is 149.9.
The average price of houses is about $518,00, and the median household income is $84,385.
6. Colorado
House prices in Colorado have been rising as fast as in high-cost coastal states. In 2020, the value of a home in Colorado was $369,600.
However, the average price has risen between $412,000 and $490,000, with a $263 cost per Square foot in 2022. The median household income is $75,231.
7. Oregon
Like New York, house prices in Oregon largely depend on the location. The average price in the greater Portland area is about $447,000 and $276 per square foot. The average cost for the rest of the state is $374,000.
With a cost of living index of 122.2, the median household income is $65,667.
8. Utah
With a median household income of about $74,197, house prices in the Beehive State do not come cheap.
The average cost of houses is from $360,000 to $465,000, and the price per square foot is $251. But the property tax is at 0.58%.
The cost of living index is 102.0.
9. New Jersey
Known for its beautiful beaches and great education system, New Jersey has one of the highest average home prices in the country at around $408,000 or $249 per square foot.
But it may not be so bad since the median household income is $85,245. And a cost of living index of 114.0.
10. Rhode Island
At 1,214 sq miles, Rhode Island is the smallest state in the United States, and they have the most expensive home prices in the country. The average home costs around $372,000 and $248 per square foot.
Their median household income is $64,994, while the cost of living index is 111.2.
11. Maryland
Houses in Maryland are going for $216 per square foot, and the average house price ranges from $317,000 to $366,000 overall.
But with a median household income of $87,063, it is not so bad after all. The cost of living index is 124.1.
12. Alaska
Alaska is the largest state in the United States and the least densely populated state. The average house price is $300,000—an 8.9% increase from the $388,648 cost of 2021.
The median household income is slightly over $77,790, and the cost of living index is 125.5
What are the cheapest states to buy a house in the USA?
One of the factors that affect home prices in the United States is location. For example, home prices in some states are almost double the average national price, while in some states, the costs are way lower.
Here is a list of the 10 cheapest states, along with the property tax rate, the cost of living index, and the median household income.
This is based on data from several sources, including the Zillow Home Value Index, the US Bureau of Census, the Missouri Economic And Research Center, and the World Population Review.
1. West Virginia
The mountain state is famous for the opportunity for numerous outdoor recreational activities it provides, such as skiing, mountain biking, and hiking.
But it doesn’t stop there; it is the cheapest state to buy a house in the country and has one of the lowest property tax rates—no wonder it has the highest homeownership rate at 79.8%.
- Home value: $144,640.
- Property tax rate: 0.59%
- Cities with the cheapest home prices: Sutton, Flatwoods, Cleveland, and Gassaway.
- Median household income: $48,037
- Cost of living index: 89.8
2. Mississippi
The homeownership rate in Mississippi is 74.8%. This is not surprising because the state has the cheapest house prices in the country, less than half of the average house prices in the US.
The median home size in the state is 1,879 square feet.
● Home value: $171,319
● Property tax rate: 0.81%
● Cities with the cheapest home prices: Goodman, Sallis, Kosciusko, and Camden.
● Median household income: $46,511
● Cost of living index: 84.5
3. Arkansas
The natural state has one of the lowest home costs in the country and a homeownership rate of 66.5%. It also has the tenth-lowest property rate in the country.
- Home value: $187,071
- Property tax rate: 0.63%
- Cities with the cheapest home prices: Bigelow, Mayflower, and North Little Rock.
- Median household income: $49,475
- Cost of living index: 90.7
4. Oklahoma
Oklahoma is the 20th largest state in the country and the 28th most populous state. The homeownership rate is at 63.7%.
This is mostly because they have one of the cheapest home prices in the country, slightly higher than Arkansas
- Home value: $187,915
- Property tax rate: 0.90%
- Median household income: $53,840
- Cost of living index:7
5. Iowa
The average home in Hawkeye State is at 1,550 square feet, and their homeownership rate is among the highest in the country at about 75.6%. This is because they have one of the least expensive house prices.
- Home value: $199,388
- Property tax rate:1.56%
- Cities with the cheapest home prices: Zearing, Randall, McCallsburg, and Colo.
- Median household income: $64,994
- Cost of living index: 88.2
6. Kentucky
Home to some of the most famous horse farms in the world, Kentucky has one of the cheapest houses in the country.
However, the costs have increased by 13.4% over the past year. But their homeownership rate is at 68.5%.
- Home value: $205,598
- Property tax rate:86%
- Cities with the cheapest home prices: Elk Horn, Campbellsville, Bradfordsville, Lebanon, and Raywick
- Median household income: $52,238
- Cost of living index:8
7. Alabama
Known as the birthplace of the Civil Rights Movement and space discovery, Alabama has one of the cheapest home prices in the country.
You can get a decent house with money below national average house prices. The homeownership rate in the country is 71.5%.
- Home value: $215,294
- Property tax rate:0.42%
- Cities with the cheapest home prices: Stanton, Plantersville, Maplesville, and Lawley
- Median household income: $52,035
- Cost of living index: 87.1
8. Kansas
Home prices in The sunflower state went up by 10.6% from the past year, but they still have one of the cheapest houses in the country, slightly higher than Alabama.
- Home value: $214,970
- Property tax rate:41%
- Cities with the cheapest home prices: Geneseo, Chase, Bushton, Holyrood, and Lorraine.
- Median household income: $61,091
- Cost of living index: 87.3
9. Ohio
Ohio is the 34th largest state in the US, with a population estimate of 11,780,017.
They have the 9th cheapest home value, and the average living space is 1,620 square feet. In addition, the homeownership rate in the state sits at 67%.
- Home value: $216,746
- Property tax rate:1.58%
- Median household income: $58,116
- Cost of living index:4
10. Louisana
Known as the cultural melting pot, Louisana has a 69.7% homeownership rate. It ranks as one of the cheapest states to buy a house in the country.
- Home value: $218,008
- Property tax rate:0.55%
- Median household income: $50,800
- Cities with the cheapest home prices: Cottonport, Plaucheville, and Moreauville
Cost of living index: 93.5
Why are houses cheaper in the USA compared to other parts of the world?
Sometimes when people complain about the prices of houses in the country, they usually refer to major cities such as San Francisco Bay Area, New York City, Hollywood, and the like.
Generally speaking, houses are cheap in America due to the favorable climate that has been established by the government, which encourages more people to invest in real estate. Consequently, this eliminates housing shortfalls.
Housing costs in other countries are eye-watering. But apart from a few cities, houses in the US are inexpensive compared to other countries.
Here are some of the reasons
Large land mass
The US not only is the wealthiest and most powerful nation on earth, but it also has the largest land mass in the world. The land area stands at 3,531,905 square miles (9,833,517 square km). Due to the amount of land in the US, the lands are relatively cheap.
Most states in the US are larger than some European countries. Oregon, for instance, is slightly larger than the UK. North Carolina is about twice the size of Ireland, and New York is somewhat larger than Greece.
Compared to places like the UK, where land is in short supply and more expensive, houses in the US are cheap due to the forces of supply and demand.
Low construction cost
In the US, wood is the preferred building material in residential construction. It is relatively cheap and in ample supply, unlike other countries that prefer bricks and concrete.