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Household Income Requirement For Homeownership Surges To $107,000

Christine Stuart
Nov 13, 2023

A significant income increase required as housing affordability erodes. First-time buyers regain footing in the market.

The median household income to buy a house jumped to $107,000, according to the National Association of Realtors 2023 Profile of Home Buyers and Sellers. The annual survey tracks transactions between July 2022 and June 2023. 

“Given the erosion of housing affordability due to higher home prices and mortgage rates, the household income for those who successfully purchased homes jumped by nearly $20,000 and topped six figures for only the second time in our records,” said Jessica Lautz, NAR deputy chief economist and vice president of research. “In a still-competitive housing market, more well-off home buyers were able to have their bids accepted by offering larger down payments and even by paying cash.”

Still, first-time buyers made up 32% of all home buyers, which is up from 26% last year, but well below the average of 38%. 

“First-time buyers tiptoed back into the market this year with less competition and fewer multiple-offer scenarios,” said Lautz. “While the share of first-time buyers is still near historic lows, it is higher than last year. Notably, today’s first-time buyers had household incomes nearly $25,000 above last year and are more likely to use financial assets to enter the market.”

In the current market, 80% of homebuyers opted for financing, showing a slight uptick from last year's 78%, although still lower than the 87% reported two years ago. First-time buyers, on average, made down payments of 8%, marking the highest figure since 1997 when it stood at 9%. Meanwhile, repeat buyers placed typical down payments of 19%, reaching the highest level since 2005 when it was 21%. First-time buyers increasingly relied on various financial assets for down payments this year, with 11% using proceeds from stock or bonds, 9% from their 401k or pension, 2% from their IRA, and 2% from cryptocurrency sales.

The typical home seller was 60 years old – unchanged from last year’s report. Sellers typically lived in their homes for 10 years before selling.

The report is similar to one released last month by Redfin that found a homebuyer must earn $114,627 to afford the median-priced U.S. home, up 15% ($15,285) from a year ago and up more than 50% since the start of the pandemic.

The typical American household earns about $40,000 less than the income needed to buy a median-priced home, according to Redfin. The median household income was roughly $75,000 in 2022, the most recent year for which annual income data is available. Hourly wages have risen in 2023, but not nearly as fast as the income necessary to afford a home is rising: The average U.S. hourly wage has increased by about 5% over the last year.

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