The estimated income needed to afford a typical home fell to $109,796 in June, continuing a gradual decline since October but remaining about $22,000 above the earnings of a typical household.
By yourNEWS Media Newsroom
American households needed an estimated annual income of $109,796 to afford a typical home listed for sale in June, according to an Aug. 5 report from real estate brokerage Redfin.
The figure was slightly below the record $110,382 required in 2025 and continued a monthslong decline that began in October. Even with that improvement, the income threshold remained approximately $22,000 higher than what a typical household earns.
That gap was narrower than it had been one year earlier, when the difference between median household earnings and the income required to purchase a home stood at about $26,000.
Redfin said housing affordability was largely unchanged from the previous year because monthly ownership costs and household incomes were increasing at similar rates.
Senior economist Yingqi Xu said the continuing five-figure disparity has kept many potential buyers out of the market, although conditions have become somewhat more favorable for those who can afford to proceed.
“Even if the market isn’t becoming much more affordable, it is becoming a bit more manageable for house hunters,” Xu said. “It’s a buyer’s market in most of the country, especially places that were once pandemic homebuying hotspots like Nashville and Austin, giving buyers lots of options to choose from and strong negotiating power.”
The income required to purchase a home rose sharply during 2022 and 2023 as property prices climbed during the pandemic-era buying surge and mortgage rates more than doubled.
Freddie Mac data showed that the average rate on a 30-year fixed mortgage was 2.65% for the week ending Jan. 6, 2021. By the week ending Oct. 25, 2023, the rate had climbed to 7.79%.
Borrowing costs have eased from that peak but remain elevated, keeping monthly mortgage payments high even where home-price growth has slowed.
The National Association of Realtors reported Aug. 4 that home prices increased in 80% of the metropolitan markets it tracked during the second quarter of 2026. That was up from 71% of markets during the first quarter.
Home sales also rose despite higher mortgage rates, which NAR Chief Economist Lawrence Yun said could indicate that demand has been accumulating as employment and household incomes remained steady.
“It is welcoming to see incomes rising faster than home prices, which has helped boost affordability—but the big short-term challenge to affordability is coming from rising mortgage rates,” Yun said.
Zillow projected in a July 29 statement that mortgage rates could finish 2026 at approximately 6.4%, slightly above their levels during the fall and winter of 2025.
The real estate marketplace said such a rate could erase some recent affordability improvements and make it more difficult for listings and sales to remain above their year-earlier levels.
Although wages have grown faster than home values in much of the country, higher prices for food and other everyday goods have absorbed part of those gains. Zillow said those expenses reduce the amount prospective buyers can devote to a down payment and monthly housing costs.
The Trump administration has pursued several policy changes aimed at reducing regulatory costs and expanding access to homeownership.
On June 23, the Department of Housing and Urban Development announced revisions to the Federal Housing Administration’s Single Family mortgage insurance program. The changes eliminated outdated requirements and reduced administrative burdens intended to make FHA financing more efficient for borrowers and lenders.
“Every unnecessary regulation comes with a cost, and too often homebuyers pay the price,” HUD Secretary Scott Turner said. “If a policy does not protect taxpayers, improve affordability, or expand opportunity for Americans, we should rethink it. As we recognize National Homeownership Month, these FHA actions reflect that commitment by eliminating barriers to expand homeownership opportunities.”
HUD and the Department of Agriculture also rescinded an energy-standards policy in April that HUD said would have increased home-construction costs by between $20,000 and $31,000.
President Donald Trump issued an executive order in March titled “Removing Regulatory Barriers to Affordable Home Construction.”
The order directed the secretaries of HUD, Agriculture and Energy to take “appropriate action to reform and, where appropriate, eliminate unduly burdensome or costly energy-efficiency, water-use, or alternative-energy requirements regarding housing.”
Trump said unnecessary regulatory barriers and “onerous mandates” had slowed new-home construction and increased costs for American buyers.
Despite the recent decline in the income needed to purchase a home, the Redfin findings show that affordability remains out of reach for many households as mortgage rates, home prices and other living expenses remain elevated.
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