Household Budgets in 2025: Bare Essentials Take Half the Pie
08 November 2026
Rising housing and food costs are reshaping household budgets and limiting choices
The share of U.S. household spending devoted to housing and food reached 46.9% in 2025, up from 42.8% a decade earlier, according to new data from the Bureau of Labor Statistics. This is the highest percentage since the start of the BLS's 37-year series tracking consumer expenditures.
Americans now spend close to half their income on heating, eating, and keeping a roof over their heads, leaving less room for simply remaining on track with their savings and debt. Banks and lenders may see more families struggling to build up emergency funds.
At the same time, accelerating food costs have started to reshape where families can and cannot afford to eat and shop. The consumer-saving website Savings.com reports that the average weekly grocery bill for a family of four between December 2025 and January 2026 reached $175, or 14% higher than five years ago, adjusted for inflation. That's nearly as much as the $176 per week spent on all food in 2013.
Food Pressures Deepen
Housing is only one factor driving a sharp upward tilt in household budgeting. Food inflation has been running especially high.
Food prices rose 6% in 2025, according to figures published by the regulator. At about 13% of total household spending, that's the highest share since 2011. Inflation is spreading beyond groceries to restaurant tab shrinkage - in 2025, Americans' spending on food away from home accounted for 7% of their total, up from 6.1% in 2024. Fortune magazine's Ben DiPietro reported that the average U.S. consumer spent $10,633 on food in 2025, up sharply from $10,169 in 2024.
Gas and rental prices pose financial pressure points for middle-income families.
The residential electricity rate rises outpaced earnings in 31 states between June 2025 and June 2026, according to the Urban Institute. In addition, families with two young children are paying $1,600 more annually for child care than in 2017, and renters are paying $210 more per month for housing than in 2017. For reference, the median monthly rent for a one-bedroom apartment in the New York City metro area newly topped $3,000 in 2026, up 9% from 2025.
To cope, consumers are taking additional jobs and delaying big-ticket purchases. Prime Digital Finance's Q2 2026 Financial Security Monitor found 71% of middle-income adults said their income was falling behind the rising cost of living. Two-thirds of those respondents have delayed a major purchase such as a car or a home appliance, and half have delayed home repairs. A majority said they either already had a second job or were considering one.
This suggests that higher costs are contributing to a slowdown in family formation and household formation. The National Multifamily Housing Council cites steep rent increases as a key factor in a record number of adult children living with their parents: 25.2 million in 2025, according to a report cited by CBS News. Among 25- to 34-year-olds living with parents, 7 in 10 had jobs, according to the same report.
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Home ownership is falling as well, particularly in the nation's most expensive cities. Affordable housing crises have been mounting in coastal areas like Salinas and Riverside, where 18.8% of adults now live with their parents, worsened by a combination of high rent and wage stagnation.
In a closely connected trend, falling gas prices are encouraging Americans to drive less. Consumer Reuters Institute surface transportation figures show gas costs are 3% lower in early 2026 than the equivalent period of 2025. However, total vehicle miles driven fell 2% and passenger volumes fell 3%.
These shifts imply that transportation-related infrastructure investment may find itself under sudden pressure from slowing demand. Ongoing high costs of gasoline also weigh on the operating budgets of small businesses, airlines, and shipping companies. Negative effects on tax revenues reflect lower levels of consumer spending on gas and related activities.
Transportation Options Appear
As vehicle use tails off, public transportation systems are finding a second wind. Figures from the American Public Transportation Association show public transit ridership rose 2.5% in 2025-2026, the fourth straight yearly increase. New technologies are also broadening the options for last-mile mobility: the number of dockless scooters and electric bicycle rentals grew 13% in 2025, according to Business Insider.
Even so, the share of household expenses devoted to transportation remains high, at 17.1%. Travel and accommodations took 4.8%, another point of pressure.
Between transportation and travel, recession-related cutbacks and affordability crunches have been snuffing out unlikely earning streaks from hotels, airlines and travel agencies that had been riding the tailwind of stimulus and vacations from covid restrictions. Counterpoint Global's Matthew Boss writes that the S&P 500 transportation index shows over the last six financial quarters, capital expenditures across the airline, cruise and rail industries collapsed to 38% of 2022 levels.
The latest round of price increases will have particular bite for the lowest-income families and individuals. Brookings economist Ted Garver found that in 2024, lower- and middle-income families already dedicated 63% of their budgets to necessities such as housing, food, child care and transportation, compared to 40% for higher-income families. A similar analysis by the Urban Institute suggested that average child care costs for a married couple with two children topped 6.5% of family income in 2025, up from 5.1% in 2020. This suggests financial pressures for families wondering whether to have a first or second child.
The uptick in housing costs is having an especially notable effect on multi-generational households. The National Housing Survey of the Federal association national home builders showed multi-generational homebuyers accounted for 56% of the move-up homebuyer poll in 2025, 11% higher than 2023.