Incomes need to rise $50K for median-priced homes to reach 2019 affordability
According to Realtor.com, there are two ways to get back to the level of home affordability Americans have enjoyed over the past decade. Neither seems realistic in the near future.
In 2019, the mortgage payment on an average-priced home accounted for about 21% of the median household income. Today, this rate is over 30%, reflecting a much higher figure. house prices Mortgage rates nearly doubled since January 2022, according to a recent report analysis from the real estate listing platform.
Realtor.com calculates that barring a sharp drop in home prices, returning monthly payments to 2019 levels would require one of two things:
- Household income increased by 56% rose from $84,763 today to an average of $132,171
- Mortgage loan interest rates are falling to 2.65%It decreased from 6.15% as of February 6
Neither option seems likely in the near term. Real median household income has increased by only 17% over the past 20 years. According to the US Census Bureau. Mortgage rates are more likely to fall current 30 year fixed rateHowever, most estimates predict that this rate will still hover around 6% by 2026.
Even at this level, affordability gains may be limited. National Association of Realtors projects House prices are predicted to rise by around 4% in 2026 as renewed demand faces stubborn supply shortages.
“The U.S. housing market continues to grapple with a persistent mismatch between housing supply and buyer demand,” said senior economic research analyst Hannah Jones. realtor.comHe tells CNBC about Make It. “If buyer demand strengthens without a corresponding increase in supply, renewed price increases are likely.”
Limited housing supply remains a problem
A chronic housing shortage continues to put pressure on housing affordability. According to Realtor.com, there is a shortage of nearly 4 million homes nationwide. predictionsThis gap helps explain why lower mortgage rates or stronger wage growth alone may not be enough to deliver significant gains in affordability.
“You can’t really solve the affordability crisis by subsidizing demand through artificially cheap financing,” says Jake Krimmel, senior economist at Realtor.com. He says the supply of homes needs to better meet demand for costs to come down.
Supply has been slow to catch up in part because zoning rules and lengthy permitting processes often limit how much new housing can be built or where it can go, according to a separate report. Realtor.com’s 2025 report.
According to NAR, expanding housing supply through additional construction and policy changes remains critical to relieving affordability pressures, especially in markets where supply is constrained.
Legislators at the federal level, bipartisan proposals Although most are in the early stages, they target zoning, permitting and construction bottlenecks.
More changes are happening at the state level. Texas and California pass laws to loosen zoning rules and make permitting easier, but impact mixed up so far.
The timeline for closing the housing supply gap also varies widely by region. 2025 Realtor.com report. The report estimates that at the current rate of construction and household formation, the supply gap could close within three years in the South and six and a half years in the West. The Midwest will need roughly four decades. Under current trends in the Northeast, this gap is unlikely to ever close.
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