The income necessary to afford a median-priced home in the United States has stabilized at a record high, requiring a six-figure salary, according to a June report from Redfin. The household income needed to purchase a typical home while spending no more than 30% of income on a monthly mortgage payment stands at $109,796. This figure represents a marginal decrease of 0.5% from the previous year's peak of $110,382.
This income threshold remains significantly higher than the median U.S. household income, which is $87,599 annually, an increase of 4% year-over-year. "The earnings needed to buy a house have stabilized after several years of deterioration, but that doesn’t mean homes are affordable to the average American," Yingqi Xu, a senior economist at Redfin, stated. "There’s still a double-digit gap between what the typical household earns and what they need to comfortably buy a home, leaving many prospective first-time buyers stalled on the sidelines."
For the average buyer, purchasing a median-priced property would consume approximately 38% of their annual household earnings. However, the affordability deficit—the difference between the income needed and the median salary—has shrunk. It currently stands at $22,197, down from $26,125 last year and $28,834 two years ago. Incomes and monthly housing costs are also increasing at roughly the same rate.
More options are becoming available for average buyers, with 34.2% of active listings now considered affordable, an increase from 30.5% a year earlier. The market has seen improvements in homebuying affordability in nearly half of major U.S. metropolitan areas. Typical households now earn enough to afford a median-priced home in only three major cities: St. Louis, Indianapolis, and Pittsburgh.
First-time homebuyers face a slightly more accessible market, needing to earn $70,693 to afford the typical entry-level home, a decrease of 1.5% from the previous year.