Here’s How Much Is Needed to Afford a Starter Home
With the annual median income at just over $67,000, many American households are unable to afford the average starter home
Sept. 3, 2024
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The amount needed to purchase a starter home has increased in recent years.
As housing becomes more expensive, the amount homebuyers need to earn to afford to purchase a home also grows. According to housing market platform Redfin, homebuyers need to earn approximately $80,000 per year to afford the median-priced starter home, up 4.4% from last summer and only about $500 below the all-time high. That makes starter homes just barely affordable to families earning the median U.S. income and unaffordable to families earning less than the median income.
Rising prices have pushed many middle-income Americans to buy starter homes, and pushed many lower-income households out of the market altogether. The typical U.S. household earns an estimated $83,966, just barely more than necessary to afford a starter home. But many people in the market for starter homes make less than the median U.S. income. A family earning 80% or less of the median income–$67,173 or less– cannot afford the typical starter home. Wages are increasing, but not as fast as the income needed to buy a starter home: Average hourly earnings were up 3.6% year over year in July.
