20 Markets Expected to See Affordable Housing Costs by End of 2026

Rising housing costs have become prohibitive in many parts of the U.S., but even in the largest metros, costs are expected to drop to more affordable levels by the end of the year. According to recent research from housing market platform Zillow, typical homes are projected to be affordable in 20 major markets by the end of 2026, which is the most recorded since 2022.

Nationwide, a mortgage payment now accounts for 32.6% of the median household income, but that's on track to improve to 31.8% by the end of the year.

Why is affordability improving?

In the five years prior to the the COVID pandemic, mortgage payments on a typical U.S. home required between 22.5% and 26.5% of the median household income, assuming a 20% down payment.

In 2020, however, home prices rose rapidly, and by 2022, mortgage interest rates had doubled. By October 2023, affordability reached all-time lows, when the typical mortgage payment required 38.2% of the median household income. At that time, homes in just seven of the nation’s 50 largest metros were considered affordable.

Since then, home price growth has moderated, and even fallen in some metros. Falling mortgage rates and rising incomes will also likely contribute to a nationwide improvement in affordability this year.

Which markets are projected to be the most affordable by the end of 2026?

By the end of the year, Pittsburgh is expected to be the most affordable metro among those studied. There, typical monthly mortgage payments are expected to account for just 21.4% of the area's median household income. The Steel City is followed by Birmingham, Ala., where the typical mortgage payment is projected to take up just 23.3% of the local median income. St. Louis and Detroit follow closely behind, with mortgages expected to account for just 25.2% and 25.5% of the median income by year's end.

Even in the largest housing markets, prices are falling

In December, the 50 largest markets either saw no change in home values or saw prices drop. Values held steady in San Francisco and New York month-over-month, and declined by just 0.1% in San Diego, San Jose, and Los Angeles.

Meanwhile, home values were up from a year ago in 25 of the 50 largest metros in December. At 4.8%, annual price gains were the highest in Hartford, Conn., followed by Milwaukee at 4.7%, and Cleveland at 4.2%.