The mortgage interest deduction (MID) was capped at $1 million in 1987 and not pegged to inflation. If it had been indexed, the MID cap would be over $2 million today. For context, at the time the median priced single-family home was $85,600.
While the mortgage interest deduction cap remains unchanged, the price of single-family homes has more than doubled in 25 years even after the house price declines of the Great Recession. In 2012, the median priced single-family home sold was $177,200.