According to Bankrate‘s latest 2025 Housing Affordability Study, prospective homebuyers are still burdened by the most challenging U.S. housing market in decades, with the average home requiring an annual household income of $116,986. Since early 2020, when the income required to purchase a typical home was $78,236—a near-50% increase.
Furthermore, according to Bankrate’s data, purchasers in 30 states and the District of Columbia require a household income of six figures in order to afford the average property in their location. Five years ago, the average home required a six-figure salary for buyers in just six states and the District of Columbia.
“Between elevated mortgage rates and the rise of home prices nationally to a record level, many aspiring homebuyers feel like owning a home is out of reach,” says Mark Hamrick, Senior Economic Analyst for Bankrate. “We can’t say when these conditions will ease, but we should note that home prices and availability widely vary around the nation and even throughout larger communities or metro areas. Some combination of patience and flexibility is called for.”
Income Needed to Purchase Skyrockets from Pandemic-Era Levels
A number of reasons, including rapidly rising property prices, have made owning increasingly unaffordable for many since January 2020. After accounting for inflation, the average hourly wage rose 4% during the previous five years. According to Redfin, the typical price of a home sold in January 2025 was $418,489, up 20% from an inflation-adjusted $349,750 in January 2020.
The income required to purchase a typical home has also increased because to the increase in mortgage rates since the epidemic. According to Bankrate data, rates increased by more than three full percentage points, with the average 30-year fixed mortgage rate rising from 3.68% in January 2020 to 7.09% in January 2025.
When taken as a whole, these factors have contributed to the home affordability threshold rising to an annual household income of over $117,000, which is a nearly 50% increase over the previous five years.
Which U.S. States Saw the Highest Jump in Income Needed to Buy?
Naturally, a national housing market does not exist; rather, it is a conglomeration of smaller local markets. In comparison to just six states and the District of Columbia in January 2020, some 30 states and the District of Columbia require homebuyers to earn a six-figure annual household income in order to afford a typical property.
The study discovered that the largest earnings are needed by buyers in the Northeastern and Western areas to purchase a conventional home, with two states and the District of Columbia requiring incomes over $200,000.
The top five states with the highest income requirements are:
- District of Columbia: $240,009
- Hawaii: $235,638
- California: $213,447
- Massachusetts: $174,392
- Colorado: $168,643
Buyers in the Midwestern and Southern regions need the least amount of income, making them more cheap.
The top five states that require the least income are:
- West Virginia: $64,179
- Iowa: $70,437
- Ohio: $71,080
- Mississippi: $72,072
- Indiana: $72,342
In 34 states, the annual household income required to buy a typical property has risen by more than 50 percent since January 2020, mostly as a result of tightened affordability driven on by increasing rates and demand from migrations sparked by the epidemic. While homeowners in Northeastern centers like Boston and New York moved to Florida, the Carolinas, and Tennessee, homeowners from California and Seattle flocked to the Mountain and other West states.
Utah saw the largest increase, with the required income rising by 89.4% to $151,956 over the previous five years. According to a Bankrate analysis of Redfin pricing data, the typical house sale price in Utah was $605,400 in January 2025, whereas the inflation-adjusted median was $433,546 in January 2020.
With an increase of 84.6% to $142,316, Montana experienced the second-largest increase in needed income. As of January 2025, the median price of a home sold there was $535,900. Since 2020, needed incomes have also increased in Wyoming, Maine, and Tennessee, rising 79% to $131,070, 77.4% to $110,889, and 76.9% to $103,411.
While Big, the Lone Star State Saw Little Growth in Incomes Needed
Interestingly, Texas saw the lowest growth in the annual household income required to purchase a typical home, climbing 25.8% since January 2020 to $105,633. According to Redfin, the median price of a property sold in January 2025 was $337,600, up from $290,162 in January 2020 after accounting for inflation.
Texas has a thriving labor market, but the state also has a large amount of land that may be developed, which has kept home prices low. Furthermore, our technique took into account property taxes and homeowners insurance in addition to mortgage rates and home prices. On those fronts, Texas saw positive trends.
Louisiana, Kansas, North Dakota, and Illinois, which all had lesser gains during the previous five years—ranging from 26% in Louisiana to 35.2% in Illinois—followed the Lone Star State. Compared to other states, these have seen slower population and employment growth.
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