Income Needed to Buy US Home Falls 4% Year-Over-Year in December

Homebuyers need to earn $111,252 per year to afford the typical US home for sale, down 4% from $115,870 a year earlier, Redfin reported.

The income required to purchase a home has been declining since November 2025, offering some relief to buyers. Prior to that, the required income had risen on a year-over-year basis nearly every month for five consecutive years, driven by pandemic-era home price gains. The required income peaked at more than $122,000 in June.

Redfin defines a home as affordable if a buyer taking out a mortgage spends no more than 30% of their income on monthly housing payments. The calculation is based on median home sale prices, prevailing mortgage rates, and property tax payments. The latest report focuses on December 2025, the most recent month with available data, and comparable prior-year periods.

Affordability improved in 37 of the 50 most populous US metro areas, with the largest gains in Dallas, Sacramento, California, and Jacksonville, Florida.

Nationwide, monthly housing costs are lower than a year ago. The median home-sale price stands at $426,747, slightly above last year’s level, while average mortgage rates are around 6.1%, down from nearly 7%. As a result, the median monthly mortgage payment is approximately $2,675, compared with roughly $2,800 a year earlier.

Commenting on the report, Redfin Head of Economic Research Chen Zhao said:

“The housing affordability crisis is showing signs of easing as costs come down slightly but meaningfully, opening the door for more Americans to make the jump to homeownership. While housing remains historically expensive, the trajectory is finally starting to reverse, with the door to buying a home opening a bit wider rather than closing tighter. But while affordability is improving, Americans are contending with other obstacles on the road to buying a home, like nerves about layoffs and economic uncertainty.”