A new analysis from Redfin reveals that U.S. homebuying affordability is beginning to ease after nearly five years of worsening conditions. As of December 2025, prospective buyers need an annual household income of roughly $111,252 to afford the median-priced home — a 4 % decrease from the roughly $115,870 required a year earlier.
Economists attribute the improvement to a combination of slightly lower mortgage rates and subdued home-price growth, which together have brought down monthly housing costs. Although the median home-sale price edged up slightly year-over-year to about $426,747, average mortgage rates dropped to around 6.1 %, easing the monthly burden to approximately $2,675 — down from near $2,800 last year.
Redfin’s report defines housing as affordable when monthly mortgage payments do not exceed 30% of household income, incorporating property taxes and current mortgage cost assumptions into its calculation.
“The housing affordability crisis is showing signs of easing as costs come down slightly but meaningfully, opening the door for more Americans to make the jump to homeownership,” said Chen Zhao, Redfin’s head of economics research. “While housing remains historically expensive, the trajectory is finally starting to reverse, with the door to buying a home opening a bit wider rather than closing tighter. But while affordability is improving, Americans are contending with other obstacles on the road to buying a home, like nerves about layoffs and economic uncertainty.”
Affordability trends show broad geographic improvements: 37 of the 50 largest U.S. metropolitan areas analyzed registered year-over-year gains. The most significant progress occurred in Dallas, where the income required to buy a median-priced home fell by 7.4%, followed by Sacramento, California and Jacksonville, Florida.
Despite these gains, housing remains out of reach for many Americans. The typical U.S. household earns ~$86,185, roughly $25,000 less than needed to meet the affordability threshold nationally.
In select major markets, affordability has worsened. Buyers in Detroit, Chicago, and St. Louis must now earn more than a year ago to buy the median home, driven by rising local prices.
Redfin economists expect modest, continued improvement throughout 2026, assuming wage growth outpaces further increases in housing costs — a dynamic that could slowly expand access to homeownership.
