The gap between America's most affordable housing markets and its least affordable ones is growing wider, according to Realtor.com's second annual Housing Affordability & Homebuilding Report Cards.
The report ranks states based on a combination of housing affordability and homebuilding activity, with states in the Midwest and South continuing to dominate the top of the list. Indiana moved from fourth place last year to claim the top spot in 2026, while New York finished last among all 50 states and the District of Columbia.
According to Realtor.com, the findings underscore the relationship between housing supply and affordability at a time when the nation continues to face a housing shortage estimated at nearly 4 million homes.
"A year ago, we launched this report to give policymakers a clear benchmark for progress at the state level," Danielle Hale, chief economist at Realtor.com, said. "What the 2026 update shows is that the states making real headway are the ones doing both things well — keeping homes within reach of today's median earners and building enough new supply to meet demand."
Indiana Leads The Rankings
Indiana earned the highest overall score in the report, receiving an A grade and a score of 76.3.
The state's median home price of $295,810 requires a typical household to spend 28.3% of its monthly income on mortgage payments, below the commonly used 30% affordability threshold. Indiana also posted one of the nation's highest affordability scores.
Rather than leading in any single category, Realtor.com said Indiana's top ranking reflects strong performance across affordability and construction metrics.
The remainder of the top five states were:
- Iowa
- South Carolina
- Texas
- North Carolina
South Carolina and North Carolina stood out for their pace of homebuilding. Realtor.com reported that newly built homes in both states were priced slightly below existing homes, resulting in negative new-construction premiums.
Texas continued to lead the nation in overall construction volume, accounting for 14.6% of all residential building permits issued in 2025 despite representing 9.3% of the U.S. population.
Regional Differences Become More Pronounced
The report found a clear geographic divide.
Every state receiving an A or B grade was located in either the South or Midwest. Southern states posted an average score of 60.4, while Midwestern states averaged 60.9.
By comparison, Western states averaged 41.8 and Northeastern states averaged 30.0.
Only 11 states met the traditional affordability benchmark in which a median-priced home can be purchased by a median-income household while spending less than 30% of income on housing costs. All but one of those states were located in the South or Midwest.
"The regional divide we saw last year is a continuing structural feature of the American housing market," said Joel Berner, senior economist at Realtor.com. "The states at the top of our rankings benefit from available land, lower regulatory barriers, and a building culture that prioritizes volume and accessibility."
Several States Make Significant Gains
Delaware and Utah posted the largest year-over-year improvements, each climbing 12 spots in the rankings.
Delaware rose to seventh place, supported by above-average construction activity and relatively strong household incomes.
Utah moved to 17th place, driven by one of the nation's highest permit-to-population ratios.
Colorado climbed nine positions to 18th place, while Kansas moved up seven spots to 13th.
Meanwhile, Alabama, Maryland, and New Jersey each recorded the largest declines, falling eight places from last year's rankings.
New York Falls To Last Place
New York ranked last in the report, earning an F grade and a score of 8.5.
According to Realtor.com, the state's median listing price reached $668,173, requiring a typical household to devote 55.2% of annual income to afford a median-priced home.
The state also posted a permit-to-population ratio of 0.45, indicating that housing construction is occurring at less than half the pace implied by its share of the national population.
Realtor.com reported that New York experienced a 17% year-over-year decline in permitting activity and that newly constructed homes carried a 73.9% price premium over existing homes.
New York was joined in the report's lowest tier by Massachusetts, Rhode Island, Hawaii, Connecticut, and California. All six states received F grades for the second consecutive year.
What It Means For Mortgage Professionals
While the report focuses on housing affordability and construction trends, the findings point to where purchase-market opportunities may be strongest.
States at the top of the rankings generally combine lower housing costs with higher levels of homebuilding activity, creating a larger pool of potential homebuyers and increasing housing inventory.
Conversely, states at the bottom of the rankings face the dual challenge of elevated housing costs and limited new construction, conditions that can make homeownership more difficult to attain and constrain housing supply.
The report suggests that housing affordability and inventory growth remain closely linked, with states adding new housing supply generally posting stronger affordability outcomes than states where construction activity remains limited.
