Homebuyer affordability has slipped: National Association of Realtors
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Although the increase in house prices has slowed down, buying a house does not seem to get easier at all.
Affordability of buying a home fell for the fifth consecutive month in June, according to the latest report from the National Association of Realtors housing affordability index.
Based on the average price of a single-family home of $446,400 and the average interest rate of 6.57% on a 30-year fixed-rate mortgage, the income needed to qualify for a mortgage was $109,152 last month, according to the index. The formula also assumes the buyer makes a 20% down payment.
According to the index, affordability has been declining since January, when the median home price was $398,200, the average rate was 6.19% and the income needed to qualify for a mortgage was $93,552.
But “affordable price” compared to June 2025 [last month] It was actually a little bit better because income growth outpaced home price growth and mortgage rates were a little lower,” said NAR chief economist Lawrence Yun. In June 2025, rates were higher (6.9%) and an income of $110,928 was required to qualify for a mortgage.
Experts say that mortgage interest rates fell below 6 percent at the end of February, but the start of the Iran war and the accompanying specter of inflation raised interest rates.
According to the Bureau of Labor Statistics, the latest inflation reading based on the consumer price index showed an annual increase of 3.5%. This matches the current annual increase in average hourly wages, BLS data This often means that workers’ wage increases are eaten up by inflation.
Yun also said home prices generally rise from winter to mid-summer as purchasing activity increases.
How might the affordability of buying a home change?
Looking forward, “We expect slight improvements in affordability as the market moves beyond the busy spring and summer buying season, giving buyers more bargaining power,” Yun said.
“On an annual basis, affordability could improve further if mortgage rates return to levels at the beginning of the year, that is, before the Persian Gulf conflict,” Yun said.
Average price of any existing home all-time high $440,600 Price increases slowed in June — 49.2% higher than in June 2020, according to NAR data. The June median was 1.8% higher than a year ago; well below the double-digit annual increases seen during the pandemic housing boom.
Also, some markets are more affordable than others. Generally speaking, the Midwest and South are more affordable than the Northeast and West, according to the NAR index.
“Buyers in most markets will still see prices rise, but that increase will leave room for incomes to catch up more than in previous years,” said Mischa Fisher, chief economist at Zillow. last blog post.
Meanwhile, the bipartisan 21st Century Housing PATH Act, signed into law on July 11 and aimed at increasing housing supply and addressing affordability, combines dozens of measures aimed at encouraging home construction, expanding access to financing and restricting purchases by large institutional investors.
But experts say it may take some time for home buyers to see the benefits. There is a housing shortage for over 4 million people According to realtor.comand many economists say it will take time to reverse this.
