Many Americans are growing discouraged with today’s housing market and for good reason. Homes are more expensive than what most households can realistically afford, despite steady earnings growth. With median household income just under $80,000, the majority of buyers are priced out of more than 75% of homes for sale nationwide, according to new Bankrate data.
To purchase a typical home today, buyers now need almost $113,000 per year, far above what most families earn. For those hoping to buy their first home, the gap between income and home prices has become one of the biggest obstacles in recent history.
Chen Zhao, Head of Economics Research at Redfin, summed up the challenge clearly:
“The American dream of buying a home and raising a family has become much harder. Homeownership is slipping out of reach for many.”
The Growing Challenge of Affordability
Affordability has declined sharply across the country’s largest metro areas. In most cities, homes that fall within a typical household’s budget are rare. The issue stems from several long-running trends:
- Too few homes on the market due to years of underbuilding after the Great Recession
- Lock-in effect, where homeowners with ultra-low pandemic-era mortgage rates are unwilling to sell
- Home prices that jumped during the pandemic boom
- Mortgage rates rising at the fastest pace in two decades
Wages have grown, but not nearly fast enough. As a result, even when buyers do find a home within budget, competition is intense. Many shoppers end up bidding against several other buyers, pushing prices higher.
Hannah Jones, Senior Economic Research Analyst at Realtor.com, explained that affordability varies widely by region.
If at least half of the homes in a metro area fall within reach of the average buyer, the path to homeownership is still realistic.
But when that number drops to 20% or 30% or even lower the local market is out of sync with what residents can actually afford.
In some high-cost cities such as Miami, Los Angeles, and San Diego, fewer than 2% of listings are affordable to the median household. In Los Angeles and San Diego, median home prices hover above $1 million, leaving many local families priced out entirely.
Where Homes Are Still Affordable
Although affordability is tight nationwide, not all hope is lost.
Several Southern and Rust Belt cities still offer realistic paths to homeownership:
- Pittsburgh, PA – About half of listings are within reach of average buyers
- St. Louis, MO – Similar levels of affordability
- Detroit, MI, Cincinnati, OH, Birmingham, AL – About two out of five homes are financially accessible
These regions benefit from slower price growth, more consistent construction activity, and lower overall living costs. They represent some of the last major metro areas where middle-class households still have options.
Note: Affordability estimates assume a 30-year mortgage rate of 6.8%, a 20% down payment, and no more than 30% of income spent on housing costs.
Inventory Differences: Why Some Markets Are Worse Than Others
Bankrate’s analysis shows that only 12 out of the 34 largest U.S. metros have at least 30% of listings that are affordable to the average household. Cities once considered budget-friendly like Charlotte, Philadelphia, and San Antonio now fall below that mark.
One major factor is new construction.
Jones notes that parts of the West and South are seeing more building activity, which helps relieve pressure. But in the Northeast and Midwest, construction has slowed, leaving inventory 40–60% lower than before the pandemic.
In coastal markets, demand continues to surge.
Ana Bozovic, market advisor for the Miami Association of Realtors, explained:
“There is a strong flow of wealth and talent moving here, and it’s reshaping the market. It’s not slowing down.”
This trend is also visible in California, home to four of the ten least affordable metro areas. Boston, New York, and Seattle face similar issues, driven by long-standing shortages and fast job growth in high-income industries.
The Emotional Toll: Americans Doubting the Dream
Housing experts say homeownership is now the hardest it has been in decades.
A recent Bankrate survey found:
- More than half of Americans say their income cannot keep up with rising home prices
- 1 in 5 potential buyers fear they may never save enough to purchase a home
Since 2020, home prices have climbed nearly 50%, while wages have risen only 22%, creating a gap that many families cannot bridge.
Even as mortgage rates rose, demand stayed high until recently, pushing prices even further. Some Southern and Western markets are finally seeing more inventory, but most metros still report rising prices as of Q3 2025.
According to Zhao, high borrowing costs make affordable homes even more competitive.
Many buyers choose to continue renting, since short-term mortgage payments are far higher than rent in many cities.
Why Younger Buyers Are Struggling Most
Expenses such as property taxes and home insurance are also rising by double digits. These costs make buying even harder for first-time buyers, who don’t have equity from a previous home to help with the down payment.
The result:
The median age of a first-time homebuyer is now 40, the highest on record, according to the National Association of Realtors.
Buyers who waited often saw their purchasing power shrink.
Many are settling for smaller homes, longer commutes, or postponing buying entirely.
Meanwhile, those who bought before 2022 when mortgage rates were still low are in an advantageous position. Zhao notes:
“People who bought earlier or who have higher incomes, or family support, are in a better spot. Others are finding it much harder.”
Will Affordability Improve? Experts Say Slowly — Very Slowly
Housing analysts agree: there is no quick fix.
Jones believes 2026 will bring a more balanced market, with modest price growth, slightly lower mortgage rates, and better negotiating conditions for buyers. But she cautions that the changes will be gradual.
Mortgage rates are unlikely to return to the historic lows of 2020 and 2021. Wage growth, although helpful, won’t immediately match home price gains.
“It’s a long road back to the affordability we saw before the pandemic,” Jones said.
Ultimately, the long-term solution is clear:
America needs more homes — especially those priced for middle-income households.
Until supply starts to match demand, millions of potential buyers will continue struggling to achieve the dream of homeownership. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.
