Affordability Tighter, Especially for Renters

The income necessary to afford a median home in the U.S. is rising, but renters have to spend even more of their earnings on housing.

In the second quarter of 2018, renters had to spend 28.4 percent of their income on housing, 2.6 percent more than the historical high. By contrast, if a household earned the median national income of $60,748, a typical mortgage would only require a share of 17.5 percent; the difference in spending for renter versus owner households is $6,621, which Zillow concludes is "roughly the amount the U.S. Department of Agriculture says a thrifty family of four with young children should spend on groceries."

Mortgage affordability – the share of median household income needed to affprd the monthly mortgage payment on a typical U.S. home – reached 17.5 percent in the second quarter 2018, up from 15.4 percent a year earlier and higher than it’s been in nine years. It remains well below the historical average of 21.2 percent, in part because – despite recent rises – mortgage rates remain lower than historic norms.