After a painful stretch of grappling with high homeownership costs, buyers are finally starting to see some relief.
As mortgage rates come down and home price growth slows, Americans now need to make 4 percent less money per year than they did one year ago to afford the typical U.S. home, according to Redfin.
As of December 2025 data, Americans need to earn at least $111,252 per year to afford the typical home for sale, compared to $115,870 a year ago.
Since November, the annual salary Americans require to afford homeownership has been gradually coming down, whereas previously, it had been increasing on an annual basis almost every month for the past five consecutive years in the wake of the COVID-19 pandemic boom.
A home is considered affordable if a buyer who has a mortgage spends no more than 30 percent of their income on a monthly housing payment. Redfin calculated affordability based on median home sale prices, mortgage rates and property tax payments.
Affordability is improving in 37 out of the 50 most populous metros in the U.S., with the largest gains in Dallas, Texas (annual income needed to buy a home is down 7.4 percent to $112,175); Sacramento, California (down 6.8 percent to $148,102); and Jacksonville, Florida (down 5.9 percent to $97,898).
With mortgage rates now sitting around 6.1 percent compared to 7 percent a year ago, monthly housing costs are also coming down. At that rate, and with a median home sale price of $426,747, the median monthly mortgage payment is now about $2,675 down from about $2,800 at the same time last year.
Since sellers also far outweigh buyers in most markets, homebuyers are also getting some of the biggest discounts they have seen in the past 13 years, Redfin reported.
Chen Zhao
“The housing affordability crisis is showing signs of easing as costs come down slightly but meaningfully, opening the door for more Americans to make the jump to homeownership,” Chen Zhao, Redfin’s head of economics research, said in the company’s report. “While housing remains historically expensive, the trajectory is finally starting to reverse, with the door to buying a home opening a bit wider rather than closing tighter. But while affordability is improving, Americans are contending with other obstacles on the road to buying a home, like nerves about layoffs and economic uncertainty.”
Even with gains in affordability, homeownership remains out of reach for many Americans, Redfin noted. The typical American household only earns an annual salary of about $86,185, which is $25,000 less than the salary needed to afford the country’s median-priced home. However, the median household income rose 4 percent from 2024 to 2025, and is also expected to improve this year.
Although many metros saw gains in affordability, it became more expensive this year to own a home in Detroit, Michigan, where buyers now need to earn $74,912 to afford a median-priced home, up 3.6 percent year over year. Chicago, Illinois (income required increased 3.5 percent to $105,440); St. Louis, Missouri (up 3 percent to $73,984); Buffalo, New York (up 2.7 percent to $79,919); and Cincinnati, Ohio (up 1.7 percent to $81,487), all also became less affordable for homebuyers this year.
Affordability woes are still most common in coastal markets, particularly in California. Homebuyers who live in San Jose need to earn the highest annual salary in the country of $374,241 to afford the median-priced home there. Meanwhile, in San Francisco, buyers need to earn $291,256; in Los Angeles, $248,307; and in San Diego, $231,151. In New York City, households need to earn $196,544 annually to afford the median-priced home.
However, the typical household in all five of these top-priciest markets only earns about half of what is needed to afford a home.
Congress is also working to address Americans’ housing cost concerns through new legislation. On Monday, the House passed the Housing for the 21st Century Act, a bill that seeks to improve affordability through zoning, financing and regulatory overhauls. Next, it will go to the Senate for approval. Meanwhile, the Senate is also floating its own affordability bill, the ROAD to Housing Act.
