What You Must Earn to Afford a Home in America

Homeownership is receding further out of reach for most Americans, as elevated mortgage rates and rising prices stretch the limits of what buyers can afford. A homebuyer now needs to earn at least $114,000 a year to afford a $431,250 home—the national median listing price in April, according to data released Thursday by Realtor.com. The analysis assumes that a homebuyer will make a 20% down payment and finance the rest of the purchase with a 30-year fixed-rate mortgage, and that the buyer's housing costs won't exceed 30% of their gross monthly income—an often-used barometer of housing affordability, per the AP.

• Earnings and home prices: Based off the latest US median home listing price, homebuyers need to earn $47,000 more a year to afford a home than they would have just six years ago. Back then, the median US home listing price was $314,950, and the average rate on a 30-year mortgage hovered around 4.1%. This week, the rate averaged 6.76%. The annual income required to afford a median-priced US home first crossed into the six figures in May 2022 and hasn't dropped below that level since. Median household income was about $80,600 annually in 2023, according to the US Census Bureau.

• Elite regions: In several metro areas, including San Francisco, Los Angeles, New York, and Boston, the annual income needed to afford a median-priced home tops $200,000. In San Jose, it's more than $370,000.
• COVID era: Rock-bottom mortgage rates turbocharged the housing market during the pandemic, fueling bidding wars for homes that pushed up sale prices sometimes hundreds of thousands of dollars above a seller's initial asking price. US home prices soared more than 50% between 2019 and 2024.
• Current housing market: It's been in a sales slump in the US since 2022, when mortgage rates began to climb from their pandemic-era lows. Sales of previously occupied US homes fell last year to their lowest level in nearly 30 years. In March, they posted their largest monthly drop since November 2022.
• Not all bad news for homebuyers: Home prices are rising much more slowly than during the pandemic frenzy. The national median sales price of a previously occupied US home rose 2.7% in March from a year earlier to $403,700, an all-time high for March, but the smallest annual increase since August. In April, the median price of a home listed for sale rose only 0.3% from a year earlier, per Realtor.com. Plus, as properties take longer to sell, more sellers are reducing their asking price.

(More homeownership stories.)