Typical US Household Earns $30K Less Than Needed to Afford a Median-Priced Home

On Monday, Redfin reported that as of February, the estimated median US household earns $29,448 less than it needs to afford the median-priced home.

Redfin says that’s based on the $113,520 income needed to afford the median priced home ($412,778) in February, which was up 12% from a year earlier—the biggest annual gain since August—and still not far below October’s all-time high. It was up 39% from February 2022 and up 74% from February 2021, when mortgage rates were near their all-time low of 2.65%.

The last month on record when the typical household earned more than it needed to afford the median priced home was February 2021, Redfin noted. Back then, the median household income was $69,021—6% higher than the $65,292 needed to afford the typical home.

According to Redfin, the current median price of homes is a sign of a major housing affordability crisis, but it actually marks an improvement from October 2023, when the typical household earned a record $40,810 less than needed as mortgage rates rose to their highest level in 23 years.

In remarks accompanying the report, Redfin Senior Economist Elijah de la Campa said:

“For over a decade, America has been slowly marching toward a housing affordability crisis due to chronic underbuilding, and that crisis was kicked into overdrive when the pandemic homebuying boom fueled a meteoric rise in housing prices. Now there’s another culprit squeezing homebuyers: elevated mortgage rates. We’re slowly climbing our way out of an affordability hole, but we have a long way to go. Rates have come down from their peak and are expected to fall again by the end of the year, which should make homebuying a little more affordable and incentivize buyers to come off the sidelines.”