The income required to purchase a median-priced home in the U.S. has decreased marginally over the past year, according to a new analysis by Redfin. As of June, $109,796 in annual earnings was needed to afford a typical home, a 0.5% decline from the record high of $110,382 set in June 2025. The median U.S. household income rose to $87,599 over the same period, up from $84,257 a year ago.
Home affordability has remained largely flat year over year, with housing costs and incomes growing at similar rates. While the gap between required income and typical earnings has narrowed slightly—from $26,125 last year to $22,200—it remains a significant barrier for prospective buyers. 34.2% of home listings are now considered affordable to the typical buyer, up from 30.5% a year earlier.
Redfin Senior Economist Yingqi Xu noted that the affordability gap, though reduced, still leaves many first-time buyers unable to enter the market. "Home buying affordability is essentially flat from a year ago," Xu stated. "There's still a double-digit gap between what the typical household earns and what they need to comfortably buy a home, leaving many prospective first-time buyers stalled on the sidelines."
Why Affordability Remains a Challenge
Home prices have increased by 2.2% over the past year, contributing to higher monthly housing costs. However, this rise has been offset by a corresponding increase in median incomes. The affordability gap has improved from $28,800 two years ago, reflecting a gradual recovery from the pandemic-era market distortions.
Before the COVID-19 pandemic, roughly half of home listings were affordable to the typical buyer. This share plummeted to about a quarter during the pandemic buying frenzy and subsequent surge in mortgage rates. Since then, affordability has slowly improved, though it has not returned to pre-pandemic levels.
Mortgage Rates and Market Dynamics
Mortgage rates, which surged from 2.65% in January 2021 to a peak of 7.79% in October 2023, have since moderated but remain elevated. The National Association of Realtors (NAR) reported that home prices rose in 80% of tracked metro markets in the second quarter of 2024, indicating persistent price pressures in most regions.
Redfin noted that the income required to afford a home has been declining since October 2023, though the pace of improvement has been gradual. The brokerage described the current market as a buyer’s market in many areas, particularly in regions that were pandemic hotspots like Nashville and Austin. Buyers in these markets reportedly have stronger negotiating power and more options due to increased inventory.
Long-Term Implications
Economists warn that while affordability has stabilized, the market remains out of reach for many Americans. The persistent gap between required income and typical earnings suggests that structural factors—such as high home prices, elevated mortgage rates, and limited housing supply—continue to constrain homeownership for a significant portion of the population.
Xu emphasized that the recent stabilization does not equate to affordability. "Even if the market isn’t becoming much more affordable, it is becoming a bit more manageable for house hunters," she said. "It’s a buyer’s market in most of the country, especially places that were once pandemic homebuying hotspots."