As Mortgage Rates Drop, Homes Are Becoming More Affordable
For the first time in four years, the annual income needed to afford a home in the US has decreased
Sept. 24, 2024
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Homes are becoming more affordable for the first time in four years.
Homeownership is becoming more attainable for the average household. According to real estate platform Redfin, American homebuyers now need an annual income of $115,454 to afford the median home price of $433,101. Down by 1.4% from the same time last year, this is the first time the median home price has become more affordable since June 2020. This is largely due to falling mortgage rates, with the average 30-year rate declining from 7.07% to 6.09%. While this is good news for many prospective buyers, some households still can’t afford to buy a home right now.
While housing affordability improved in August, the average American household still can’t afford to buy a home. The typical household earns an estimated $83,853 per year, which is 27.4% less than the $115,454 they need to afford the typical house. A household on the median income would need to spend 41.3% of their earnings on housing to buy the median priced home. Any household that spends over 30% is considered “cost burdened.” Less than one-third of home listings are affordable for the typical U.S. household, down from more than half before the pandemic.
