Affordability Improves for Homebuyers

Housing affordability has improved in recent months, with the typical income needed to own a home down by 4% year-over-year as of December 2025. According to real estate marketing platform Redfin, Americans now need to earn $111,252 per year to afford the typical U.S. home, compared with $115,870 one year ago.

Prior to this decline, the income needed to afford the typical home in the U.S. rose on a year-over-year basis nearly every month for five years straight, peaking in June 2025 at $122,000.

Affordability continues to improve as housing costs decline

Homebuyer affordability has improved largely due to declining costs. The median home sales price was $426,747 in December, which is slightly higher than the previous year. However, mortgage rates averaged 6.1%, which is down from nearly 7% from December 2024. Because of this decline in mortgage rates, the median monthly mortgage payment is around $2,675, compared with approximately $2,800 in December 2024.

Where is affordability improving the most?

Homebuying affordability has improved in 37 of the 50 most populous metro areas, but primarily in Dallas; Sacramento, Calif.; and Jacksonville, Fla. In Dallas, homebuyers need to earn $112,175 to afford the median-priced home in the metro, which is down by 7.4% year-over-year. Meanwhile, in Sacramento, Calif., the income needed to buy a home has declined by 6.8% to $148,102, and in Jacksonville, Fla., the income needed to afford a home is $97,898, down by 5.9% from the previous year.