Typical American Household Income Falls $30,000 Short of Affording Median-Priced US Home, New Data Shows

Rachel Acenas
By Rachel Acenas
March 26, 2024News
Typical American Household Income Falls $30,000 Short of Affording Median-Priced US Home, New Data Shows
A "For Sale" sign is posted in front of a home for sale in San Marino, Calif., on Sept. 6, 2023. (Frederic J. Brown/AFP via Getty Images)

The typical American household makes roughly $30,000 less than needed to afford a median-priced home in the U.S. according to a new Redfin analysis.

The report released on Tuesday shows buyers need to earn an annual income of $114,000 to afford the typical home. That’s 35 percent more than the average household income of $84,072.

Redfin’s data was based on its analysis of U.S. incomes and median monthly housing payments as of February 2024.

“It’s getting harder and harder to buy a home, and that is especially true for the first-time home buyers,” Atlanta-based realtor Alan Corey told NTD News in a statement. “And with a movement for buyers to also have to have a budget to pay their agent will also squeeze them further.”

Elevated mortgage rates are further making it difficult for potential homebuyers. Mortgage rates went down below 7 percent last month after they peaked near 8 percent in late October. Nonetheless, rates are still more than double the all-time low, according to the analysis.

“For the past 15 years the concept of saving for a larger home next year just hasn’t worked out. Instead buyers are just saving to buy the same home the following year at a higher price. I don’t see this changing in the near future, which means it’s the best time to buy a home right now,” Mr. Corey said.

The new data is yet another sign of the housing affordability crisis. However, analysts pointed out that the numbers also show an improvement from October, when the typical household earned a record $40,810 less than it needed as mortgage rates hit the highest level in 23 years.

Owning a home in the U.S. has become difficult as prices rise twice as fast as income, Andrew Lokenaugh, author of Be Fluent in Finance, told NTD News in a statement. Even though the median household income has risen six percent over the past year, according to the latest Redfin data, affordability is still out of reach for many Americans.

“Prices rising twice as fast as incomes makes owning very hard. Unless incomes rise faster or prices slow down more, this trend may push the American Dream out of reach for many,” Mr. Lokenaugh said.

He also said the income gap means more families may have to rent long-term instead of own, marking a possible shift in the housing market to favor landlords over owners. This could further impact communities as fewer people can afford to live and work locally over time.  More affordable housing is also needed nationwide, he said.

Additionally, building more homes would put less pressure on housing prices because it means homebuyers would have more choices. The report shows Texas has been building more homes than any other state. Fort Worth’s housing supply jumped 14 percent year over year in February, one of the biggest increases in the United States.

“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,” according to Redfin senior economist Elijah de la Campa.

“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,” he said.

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