Homeownership: How Far Out of Reach?

Home Hand Plus Minus

$30,000. A major number—even for middle-and upper-class earners—but this is the average income gap the typical household needs to come up with to afford the typical U.S. home, which now requires an average income of $114,000 annually. 

That number, which officially stands at $29,448, is an additional 35% above what the average homeowner earns according to an new study by Redfin. 

While that’s a sign of a major housing affordability crisis, it marks an improvement from October, when the typical household earned a record $40,810 less than it needed as mortgage rates hit the highest level in 23 years. 

That’s based on a Redfin analysis of the estimated median U.S. household income and median monthly housing payments as of February 2024. 

By the numbers: a typical buyer(s) buying a typical home needed to earn a combined annual income of $113,520 to afford the average home, which is now valued at $412,778. This number is 35% more than the national median household income of $84,072. 

In October, when the mismatch between median income and the income needed to afford a home was highest, homebuyers needed to earn $120,500 to afford the typical home. That was a record 51% more than the $79,689 earned by the typical household. 

February 2021 was the last month on record when the typical household earned more than it needed to afford the median priced home. Back then, the median household income was $69,021—6% higher than the $65,292 needed to afford the typical home. 

“For over a decade, America has been slowly marching toward a housing affordability crisis due to chronic underbuilding, and that crisis was kicked into overdrive when the pandemic homebuying boom fueled a meteoric rise in housing prices,” said Redfin Senior Economist Elijah de la Campa. “Now there’s another culprit squeezing homebuyers: elevated mortgage rates. We’re slowly climbing our way out of an affordability hole, but we have a long way to go. Rates have come down from their peak, and are expected to fall again by the end of the year, which should make homebuying a little more affordable and incentivize buyers to come off the sidelines.” 

By the numbers

The $113,520 income needed to afford the median priced home in February was up 12% from a year earlier—the biggest annual gain since August—and still wasn’t far below October’s all-time high. It was up 39% from February 2022 and up 74% from February 2021, when mortgage rates were near their all-time low of 2.65%. 

Affordability is strained today because housing costs are rising much faster than incomes. The median household income has increased 6% over the last year, half as much as the income needed to afford the median-priced home. 

The median monthly housing payment for homebuyers was $2,838 in February, down from a record high of $3,012 in October but up 12% year over year. 

Click here to see the source data in its entirety. 

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Kyle G. Horst

Kyle G. Horst is a reporter for MortgagePoint. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at kyle.horst@thefivestar.com.
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