Here’s a look at how much affordability has improved for homebuyers this year
Affordability is improving in 37 of the 50 most populous U.S. metro areas as mortgage rates fall and household incomes gradually rise. However, in expensive coastal markets, most households still earn only about half of what it takes to afford a normal home.
After a painful battle with the high costs of homeownership, buyers are finally starting to see some relief.
With mortgage rates falling and home price growth slowing, Americans now need to earn 4 percent less money per year than they did a year ago to afford the typical American home. Redfin.
According to December 2025 data, Americans need to earn at least $111,252 a year to afford the typical home for sale, up from $115,870 a year ago.
Since November, the annual salary Americans need to afford home ownership has been gradually declining, while previously it had risen almost every month on an annual basis for the past five consecutive years in the wake of the COVID-19 pandemic boom.
A home is considered affordable if a buyer with a mortgage does not spend more than 30 percent of his income on monthly housing costs. Redfin calculated affordability based on average home sales prices, mortgage interest rates and property tax payments.
Affordability is improving in 37 of the 50 most populous US metro areas, with the biggest gains in Dallas, Texas (the annual income needed to buy a home fell 7.4 percent to $112,175); Sacramento, California (down 6.8 percent to $148,102); and Jacksonville, Florida (down 5.9 percent to $97,898).
Now that mortgage interest rates are around 6.1 percent, compared to 7 percent a year ago, monthly housing costs are also falling. At that rate, and with the average home sales price of $426,747, the average monthly mortgage payment is now about $2,675 lower than about $2,800 at the same time last year.
Because sellers also far outweigh buyers in most markets, homebuyers are also getting some of the biggest discounts they’ve seen in the last thirteen years, Redfin reports.
Chen Zhao
“The housing affordability crisis is showing signs of easing as costs fall slightly but meaningfully, opening the door for more Americans to make the leap to homeownership,” Chen Zhao, Redfin’s chief economics officer, said in the company’s report. “While homes remain historically expensive, the trajectory is finally starting to reverse, with the door to home buying opening a little wider instead of closing tighter. But as affordability improves, Americans face other obstacles on the road to home buying, such as nerves about layoffs and economic uncertainty.”
Even as affordability increases, homeownership remains out of reach for many Americans, Redfin noted. The typical American household earns only an annual salary of about $86,185, which is $25,000 less than the salary needed to afford the nation’s average-priced home. However, average household income increased by 4 percent between 2024 and 2025 and is expected to improve this year.
While many metro areas saw a rise in affordability, it became more expensive to own a home this year in Detroit, Michigan, where buyers now need to earn $74,912 to afford a median-priced home, up 3.6 percent year over year. Chicago, Illinois (required income increased 3.5 percent to $105,440); St. Louis, Missouri (up 3 percent to $73,984); Buffalo, New York (+2.7 percent to $79,919); and Cincinnati, Ohio (up 1.7 percent to $81,487), all also became less affordable for homebuyers this year.
Affordability issues remain most prevalent in coastal markets, especially in California. Homebuyers living in San Jose must earn the highest annual salary in the country, $374,241, to afford the average-priced home there. Meanwhile, buyers in San Francisco must make $291,256; in Los Angeles, $248,307; and in San Diego $231,151. In New York City, households must earn $196,544 annually to afford the average-priced home.
However, the average household in all five of these most expensive markets earns only about half of what it takes to afford a home.
Congress is also working to address America’s concerns about housing costs through new legislation. On Monday, the House of Representatives passed the Housing for the 21st Century Act, a bill that aims to improve affordability through zoning, financing and regulatory overhaul. It then goes to the Senate for approval. Meanwhile, the Senate is also launching its own affordability bill, the AWAY to the Housing Act.
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