The housing market continues to be a hot topic, with rising home prices and high mortgage rates making it challenging for many Americans to achieve their dream of homeownership. However, there are some signs of improvement, as falling mortgage interest rates have lowered the annual income needed to buy a typical home.

According to a recent report by Redfin, the average income required to afford a typical home with a 15% down payment has decreased from $120,000 in 2023 to $115,454 in 2024. This marks the first time homes have become more affordable since 2020.

While this is positive news, it’s important to note that the typical American household still earns less than what’s needed to afford a median-priced home. The median household income in 2024 was $83,853, meaning a household would need to spend 41.3% of its earnings on housing to buy a median home.

Key Takeaways:

  • Falling mortgage interest rates have made homes more affordable.
  • The average income needed to afford a typical home has decreased from $120,000 in 2023 to $115,454 in 2024.
  • Despite the improvement, many Americans still struggle to afford a home.
  • Home prices continue to rise, offsetting some of the gains from lower interest rates.
  • Some cities are more affordable than others.

Additional Insights:

  • The vacation home market has cooled down. Mortgage-rate locks for second homes have dropped significantly, indicating a decline in demand.
  • Many Americans remain pessimistic about their ability to afford a home. A survey found that 57% of respondents doubt they could ever afford their dream home.

Conclusion

While the housing market has become slightly more affordable, challenges remain for many Americans. Rising home prices and the ongoing housing crisis continue to make it difficult for many to achieve their dream of homeownership.

Brazoban Realty is here to help you navigate the complex housing market and find the perfect home for you.

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Sources: Zachery Eanes and Alex Fitzpatrick for Axios Raleigh News, and Redfin