Some Americans may agree that housing affordability is not only stretched thin but nearly nonexistent in some of today’s major property markets. As of May 2025, the average American household will have to pay 44.6% of their income—much more than the suggested 30%—to purchase a median-priced home, according to a Realtor.com Affordability Report. Only three of the top 50 metro areas—Pittsburgh, Detroit, and St. Louis—are affordable for those with median incomes due to rising mortgage rates and property prices.
“Earnings have risen, but homebuying costs have risen faster, which means that adhering to affordability guidelines can feel challenging if not impossible in many housing markets across the country,” said Danielle Hale, Chief Economist at Realtor.com. “While a few Midwestern markets still offer a path to homeownership for the median-income household who can make a 20% down payment, in most large metros, the dream of owning a home remains out of financial reach without significant changes to either housing supply or interest rates.”
Highlights from the Monthly Housing Market Trends Report — National (2025)
- The inventory of homes for sale rose 31.5% year-over-year (YoY), marking the 19th consecutive month of year-over-year inventory growth. May 2025 inventory hit a new post-pandemic high, but remains about 14% below pre-pandemic levels.
- The total number of unsold homes, including those under contract, was up 20.8% compared to last year.
- Pending home sales- homes under contract- fell 2.5% compared to last year, as a renewed climb in mortgage rates weighed on buyers.
- Newly listed homes increased 7.2% from a year ago.
- Homes spent a median of 51 days on the market, six more than a year ago, but about the same level as pre-pandemic norms for May.
- The national median list price for homes was $440,000, about flat since last year, while the price per square foot rose 0.6%, consistent with very modest home value growth.
- Price cuts were reported on 19.1% of listings—the highest share for any May since at least July 2016.
Following a little decline from late April to early May, mortgage rates rose starting in mid-May and are currently nearing the 7%-mark once again due to market hesitancy over government trade, economic, and fiscal plans. Declining consumer sentiments and stubbornly high mortgage rates are predicted to have a negative impact on buyer and seller activity throughout the spring purchasing season and beyond. Although the income required to buy a home has leveled out nationally over the past year, it is still far higher than it was before to the epidemic, highlighting the continued difficulty of affordability even as market conditions slowly improve.
Median-Income Earners Find Affordable Homes Following the 30% Rule
Only three large metro areas—Pittsburgh, Detroit, and St. Louis—permit median-income individuals to buy a median-priced home without spending more than 30% of their salary, assuming a typical 20% down payment and an average mortgage rate of 6.82% in May.
| Metro area | May median listing price | Monthly with tax & insurance | Annual mortgage payment + tax & insurance | Median household income (2025) | Share of income |
| Pittsburgh | $249,900 | $1,664 | $19,970 | $72,935 | 27.4 % |
| Detroit-Warren-Dearborn, MI | $270,000 | $1,798 | $21,576 | $72,493 | 29.8 % |
| St. Louis, MO-IL | $299,900 | $1,997 | $23,966 | $79,869 | 30.0 % |
Because of their comparatively cheap house costs, these metro areas continue to draw in both buyers and investors; yet, even in these strongholds, affordability may be threatened by ongoing demand for inexpensive real estate.
“Detroit has always stood out for its affordability, and even with home prices rising, it remains one of the last major markets where median-income buyers still have a real shot at homeownership,” said Anthony Djon, founder of Anthony Djon Luxury Real Estate. “That said, demand is picking up fast—especially in the lower price points. First-time buyers are moving with urgency because they know the window to buy affordably is narrowing.”
Income Required in California & the Big Apple Surpasses U.S. Norm
Unlike Detroit and Pittsburgh, the percentage of income needed to buy a home in California’s biggest cities is far higher than the national average. Although the tale of California’s inaccessibility is not new, the extent of its affordability may still surprise some. According to data from May 2025, the average Los Angeles home costs over 104% of the median salary in the area. This means that even with no other expenses, the average household would not be able to pay for housing each year. Affordability ratios were significantly higher than 60% in some metro areas, such as Boston, New York, San Diego, and San Jose, CA.
That being said, it may not be shocking that, in contrast to the 65.1% national homeownership rate, 51.0% of households in the Los Angeles area rent, and just 49.0% of households own their own houses.
| Metro area | Median listing price (May) | Monthly with tax & insurance | Annual mortgage payment + tax & insurance | Median household income (2025) | Share of income |
| Los Angeles-Long Beach-Anaheim, CA | $1,195,000 | $7,958 | $95,496 | $91,380 | 104.5 % |
| San Diego-Chula Vista-Carlsbad, CA | $995,000 | $6,626 | $79,513 | $103,066 | 77.1 % |
| San Jose-Sunnyvale-Santa Clara, CA | $1,419,500 | $9,453 | $113,436 | $156,664 | 72.4 % |
| New York-Newark-Jersey City, NY-NJ | $795,000 | $5,294 | $63,531 | $94,960 | 66.9 % |
| Boston-Cambridge-Newton, MA-NH | $879,000 | $5,854 | $70,243 | $109,295 | 64.3 % |
Raising earnings or reducing housing costs are two strategies to make housing more affordable. Wage rises may be beneficial, but large, pervasive pay increases may also raise demand for housing and drive up home prices. Either lowering mortgage rates or home prices will result in lower housing costs. Recent economic uncertainty makes it more difficult to forecast the course of mortgage rates, and it is not anticipated that they will change much from their current position. So, what can be done?
The answer: Build more reasonably priced housing.
In markets where there is a rising imbalance between supply and demand, housing prices continue to remain stubbornly high. On the other hand, in many markets that have experienced substantial new construction activity over the past five or more years, home values have decreased. In tight housing markets, new home building and supply, particularly at affordable price points, might assist ease pricing pressure.
Although purchasing a home is a significant life milestone, many Americans now find it to be even more difficult. Experts suggest assessing how household income compares to typical home costs as mortgage rates and home prices remain persistently high.
To make homeownership more accessible to the average household, “a couple of levers could be moved to make homeownership more feasible for the typical household,” according to Hannah Jones, Senior Economic Research Analyst at Realtor.com. Housing costs are one lever, while income is the other. All other things being equal, homeownership might become more affordable with a rapid and substantial salary rise. The necessary rate of wage growth, however, is far higher than historical averages. Furthermore, such a large income increase is unlikely to maintain all other factors equal and would probably increase demand for housing, which would raise home prices and the cost of buying one.
Note: Monthly payment assumes May 2025 average Freddie Mac mortgage rate (6.82%), 20% down payment and a tax and insurance rate of 1.72% annually. “Affordable” refers to the 30% rule-of-thumb, which suggests that households should spend 30% or less of their annual income on housing. The median household is a 2025 estimate based on the latest Census data. Median listing prices are from May 2025.
