Income Needed to Afford Typical US Home Holds Steady in June

On Wednesday, Redfin reported that Americans needed an annual income of $109,796 to afford the typical US home for sale in June, down 0.5% from the record-high $110,382 required a year earlier.

Redfin considers a home affordable when a buyer with a mortgage spends no more than 30% of their income on monthly housing costs. The analysis is based on median home sale prices, prevailing mortgage rates, and property tax payments and assumes a 15% down payment.

The median US home sale price rose 2.2% year-over-year in June, while the average mortgage rate declined slightly but remained in the mid-6% range. Median household income was estimated at $87,599, up 4% from a year earlier.

Redfin Senior Economist Yingqi Xu said:

“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. 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. But even if the market isn’t becoming much more affordable, it is becoming a bit more manageable for house hunters. It’s a buyer’s market in most of the country, especially places that were once pandemic homebuying hotspots like Nashville and Austin, giving buyers lots of options to choose from and strong negotiating power.”