U.S. Housing Affordability Remains At Record Lows
According to Redfin, a leading national property brokerage, the average U.S. household earns $29,448 less than is needed to afford the median-priced home in 2024.

Though that indicates a serious housing affordability crisis, it represents an improvement from October when households earned on average $40,810 less than necessary due to rising mortgage rates reaching their highest point since 1993.

Redfin’s analysis based on estimated median U.S. household income and monthly housing payments as of February 2024 supports this claim.

Consumers needed an annual income of at least $113,520 in February in order to afford the median-priced U.S. home at $412,778 ($412,778); that figure represents 35% more than the $84,072 median household income figure.

In October, when the disparity between median income and homebuyer affordability reached its greatest, homebuyers required earnings of at least $120-500 to afford an average home – 51% more than their $79-689 income level.

February 2021 was the last month on record where an average household earned more than necessary to afford the median priced home, when its median household income was $69,021–6% higher than what was required to afford an affordable property of this price range.

Redfin Senior Economist Elijah de la Campa noted, “Over a decade has seen America steadily move toward a housing affordability crisis due to chronic underbuilding, with this crisis intensified during the pandemic homebuying boom that caused house prices to skyrocket,” adding: “Now another factor squeezing homebuyers: elevated mortgage rates.” He further commented, “Rates have come down since peaking out but remain elevated; rates should see further decrease by year’s end and make home ownership more achievable and encourage buyers off the sidelines.”

Home sales dropped to their lowest level since approximately three decades in 2017 due to elevated mortgage rates putting homeownership out of reach for many Americans, particularly first-time buyers with no equity from selling a previous home. Many remain priced out due to rates remaining elevated and home prices increasing (up 7% year over year in February alone due to a shortage of available properties for sale).

Housing Affordability Remains Near Historic Lows as Housing Costs Increase Twice as Fast as Incomes

In February 2024, it took an income of $113,520 to afford the median priced home–an increase of 12.1 percent year-on-year compared to $113,520 a year earlier – to afford this home, up 12% year-over-year compared with August and close to October’s all-time peak. Furthermore, mortgage rates had reached near their record low of 2.65% during February 2021 when this figure had first been calculated.

Affordable living has become increasingly difficult with housing costs rising at twice the pace of income increases. Over the last year, median household income rose 6%; that increase represents only half the amount needed to afford the median-priced home.

In February, homebuyer payments amounted to an estimated average monthly housing payment of $2,838 – down from an all-time record high of $3,0112 set back in October but an increase of 12 percent year over year.

Metro areas that offer affordable housing have small income increases required to purchase homes.

Redfin’s analysis showed that San Antonio homebuyers needed only to earn an additional 1% year over year to afford an average home in February. Next came Detroit (3%), Austin TX (4%) Fort Worth Texas (5%) and San Francisco (6%) as cities where home prices increased the most.

Home prices in Texas remain soft, which explains why many metro areas of the Lone Star State are experiencing relatively minor increases in income needed to afford homes. San Antonio experienced its only major metro where median home sale prices fell year-over-year in February; Fort Worth and Austin posted decreases of less than one percent annually while being among some of the nation’s smallest gainers.

Texas has seen more home construction than any other state, which has put downward pressure on prices due to increased competition between buyers. Fort Worth saw one of the highest year-on-year increases for housing supply – 14% year over year in February was one of the largest increases across all U.S. markets! In Austin however, housing markets have lost momentum as an increase in out-of-towners has driven up costs unreasonably high and priced out many buyers from entering.

Metro areas with the greatest increases in income needed to afford a home

Anaheim, CA homebuyers required 20% more income in February to afford the typical home, marking the largest jump nationwide. West Palm Beach and Fort Lauderdale in Florida each saw 18% increases, New Brunswick, NJ 18% increases and San Diego 173%.

These metro areas have experienced some of the sharpest spikes in home prices, which has significantly raised income requirements to afford homes. Anaheim was among the three most expensive markets nationwide with median sale prices increasing 16% year over year in February; West Palm Beach and Fort Lauderdale followed closely behind with 13% increases each.

There are thirteen major metros where buyers with incomes of less than six figures can afford the typical home.

Detroit was the most affordable market in February with an income requirement of $46,168 to afford the median priced home, followed by Cleveland ($58,186), Pittsburgh (61 603 ), St Louis (66 755 ) and Philadelphia (731 182). Indianapolis Warren Michigan Cincinnati Milwaukee Kansas City Missouri Virginia Beach Virginia San Antonio Columbus Ohio are other metro areas where homebuyers making less than $100,000 could find homes they could afford in these cities.

There are 11 major metro areas where homebuyers make more than they need in order to afford a house.

Detroit households typically earn 39% more than they need to afford the $165,000 median priced home, at an income level of $64,018, as compared to $46,168 required for purchase. Pittsburgh ranks second at 30% more than necessary before Cleveland (29%), St Louis (29%) and Warren (21%), among others. Other metropolitan areas where households typically outstrip this requirement include Indianapolis (11%), Cincinnati (20%), Baltimore (9%) Milwaukee 5% Kansas City 4% and Minneapolis 4% – where typical household earnings exceed affordability requirements by similar percentages.

There are seven metro areas where an average household earns 50% less than they need in order to afford their home.

Los Angeles households typically earn $93,315, which is 60% below the $236,079 needed to afford a median priced home for $874,800. Other metro areas in which typical household earnings fall more than 50% below this figure are Anaheim (58% less), San Francisco (58%), San Jose, CA (55%), San Diego (55%), New York (52%) and Miami (51%).