The Salary You Need to Afford the Average Home Just Fell. But It’s Still Six Figures

Buying a typical U.S. home still requires an income far above what most households earn.

The annual income needed to afford the typical U.S. home fell to $109,796 this year, according to a new analysis from Redfin. While that’s slightly below last year’s record high of $110,382, the amount is still about $22,000 higher than the median U.S. household income of $87,599 — underscoring how far homeownership remains out of reach for many Americans.

Homebuying affordability has essentially held steady over the past year as rising household incomes have kept pace with higher monthly housing costs. In other words, buyers technically need to earn a bit less than they did a year ago, but the affordability picture has changed very little.

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“The earnings needed to buy a house have stabilized after several years of deterioration, but that doesn’t mean homes are affordable to the average American,” Redfin senior economist Yingqi Xu said in the report.

Under the traditional 30% rule, housing is considered “affordable” when monthly costs consume no more than 30% of a buyer’s income (assuming a 15% down payment). By that measure, the typical household would still need to allocate 37.6% of its income to those costs, down from 39.3% a year ago.

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Affordability improves in some markets, but not everywhere

While affordability remains strained, there are signs that the market is becoming slightly more manageable for buyers. Approximately one-third (34.2%) of U.S. home listings in June were within reach of a household earning the median income, up from 30.5% a year earlier.

That shift also comes as the housing market has become less competitive in many areas of the country. According to a separate analysis of Redfin data by Best Interest, homes are increasingly selling below their original asking prices in 41 of the country’s largest housing markets, suggesting sellers are becoming more willing to negotiate amid softer buyer demand.

But a more buyer-friendly market doesn’t mean homes are suddenly affordable. Buyers today are still operating in a much tighter market than they were before borrowing costs jumped in 2022. From 2013 through 2021, more than half of U.S. listings fell within the typical buyer’s budget in nearly every month during that period.

Buyers have seen the biggest improvements in markets where home prices have started to fall. In Seattle, for example, the annual income needed to afford the typical home dropped 7.4% over the past year — the largest decline among the major metros Redfin analyzed.

San Jose, Calif., and Portland, Ore., followed, with the income requirement falling 6.5% and 4.5%, respectively. But even in those markets, homeownership remains out of reach for many households. In San Jose, for example, buyers would still need to earn $423,840 to afford a median-priced home. That’s about $250,000 more than the area’s median household income.

This trend isn’t universal, though. In some parts of the country, the path to homeownership has become even more difficult. Pittsburgh, San Francisco and West Palm Beach, Fla., saw some of the biggest increases in income needed to buy a home, largely due to rising home prices.

San Francisco, in particular, remains one of just seven seller’s markets in the country, fueled in part by renewed demand from the tech sector. Buyers there now need to earn $453,205 to afford a median-priced home, up 6.2% from a year ago.

Redfin economists expect Buyers could see some additional relief later this year. Still, they cautioned that progress — in terms of affordability — could disappear if mortgage rates rise again or inflation pressures push borrowing costs higher.

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