Housing in about a dozen major metro areas is becoming more affordable as a boosted national inventory is being countered by increases in median home prices plus rising mortgage and interest rates.
Why It Matters
Housing affordability has been a central concern for Americans as home prices and mortgage rates have surged in recent years.
Understanding the shifts in housing affordability is crucial for both prospective homeowners and policymakers grappling with the persistent gap between median household income and the cost of homeownership. The nationwide trend remains challenging, with the typical buyer still needing to earn about $25,000 more than the median household to afford a median-priced home, according to Redfin’s housing market analysis.
What To Know
New data from real estate and brokerage firm Redfin released August 6 shows some signs of relief for 11 major U.S. metropolitan areas, many of them Sun Belt cities that previously saw rapid price growth during the pandemic.
Redfin’s analysis of Multiple Listing Service (MLS) data as of June 2025 showed that the annual income required to purchase a median-priced home fell year over year in 11 of the 50 largest U.S. metro areas.
The largest drop was in Oakland, California, where the required income declined 4.6 percent to $244,073. Other cities with notable decreases include West Palm Beach, Florida (-3.7 percent); Jacksonville, Florida (-3.5 percent); San Diego (-3.2 percent); and Tampa, Florida (-2.1 percent).
Rounding out the list are Atlanta, Phoenix, St. Louis, Orlando, Sacramento, California, and Dallas, each with measurable improvements in affordability over the past year.
The trend in these metros was attributed to falling home prices — largely a result of a pandemic-era building surge that increased housing supply.
Similar declines were observed in the other highlighted cities. Florida stood out, with four metros — West Palm Beach, Jacksonville, Tampa, and Orlando — making the list, a shift attributed to reduced prices amid higher insurance, HOA costs, and a rise in natural disasters impacting the market.
Despite these improvements, affordability gaps persist. The typical U.S. homebuyer still needs to earn $112,131 per year to afford the median-priced home — about $25,000 more than the median household earns.
Nationwide, an estimated 39 percent of household income goes to housing, above the 30 percent threshold considered affordable, but slightly down from 40.5 percent a year ago. About 34.6 percent of home listings are considered affordable to the typical household, a minor improvement compared to the previous year.
Conversely, some of America’s most affordable metros faced increased difficulty, with the income needed to buy rising rapidly.
Detroit saw a 9.9 percent increase, though at $57,432, it remains the lowest required income among major metros. Other Rust Belt cities such as Cleveland, Newark, Chicago and Pittsburgh also reported increases, as influxes of buyers drive up prices despite their historic affordability.
Fortune reported that Midwestern cities like Detroit and Cleveland still offer median home prices around half the national average, supporting migration from higher-cost coastal regions.
High Rates, Little Ingenuity
Andrew Lieb, a real estate litigator, told Newsweek via email that the two main issues on home affordability are mortgage rates and insurance costs.
“While mortgage rates are impacting everyone, insurance is very location specific,” Lieb said. “If you live by the water or have a second home, or even just your property is over 5,000 square feet, getting insurance is going to cost you astronomical numbers and require lots of upgrades just to bind the policy.
“However, as a real estate litigator, I can tell you that not having homeowners’ insurance is going to cost you a heck of a lot more in legal fees and damages if someone is injured on your property — so think twice before forgoing this important product.”
Andrew Ragusa, a real estate broker with Remi Realty in New York City and Long Island, told Newsweek via email that there are currently no affordability increases in his region.
“I have friends in Florida who are trying to sell their house right now and they’re having a really hard time because there’s so much inventory down there and prices are dropping,” Ragusa said.
Part of that is attributed to construction styles, with Ragusa saying homes in Florida “are cookie-cutter standardized” and that building designs lack “uniqueness.”
“That means if you won’t take a low offer on yours, someone else will take the low offer on theirs — and the houses are pretty much the same, especially in those developments,” he said.
What People Are Saying
Katie Shook, a Redfin Premier real estate agent in Phoenix, in a statement: “Buyers are battling affordability and they see a lot of listings sitting on the market, so they’re asking for major concessions. We’ve been in a buyer’s market for the past eight months. If your home isn’t in 10/10 condition and priced at or below market value, it’s going to linger on the market.
“A lot of sellers are offering $10,000-$15,000 to cover the buyer’s closing costs to seal the deal. Some home features, like a landscaped backyard or pool, aren’t getting the return they used to. Buyers are no longer willing to pay a premium for those things.”
What Happens Next
With home prices leveling off or declining in several major metros and inventories projected to rise, industry analysts expect affordability to improve modestly in more markets by the end of 2025.
Redfin’s data suggests national home prices could fall up to 1 percent by year-end, giving some would-be buyers an opportunity to reenter the market. However, real estate markets remain highly regional.
