The typical U.S. household is still unable to afford a median-priced home, although some progress has been made.
According to new data from Redfin (NASDAQ:RDFN) that analyzed the February housing market, buyers needed to earn an annual income of $113,520 to afford the $412,778 median-priced home – which is 35% more than the $84,072 median household income. But that figure is an improvement from last October, when the typical household earned a record $40,810 less than it needed as mortgage rates hit the highest level in 23 years.
February 2021 was the last month on record when the typical household earned more than it needed to afford the median priced home – at the time, the median household income was $69,021, which was 6% higher than the $65,292 needed to afford the typical home.
“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,” said Redfin Senior Economist Elijah de la Campa. “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.”
;
