Half of first-time buyers say at least part of their down payment came from a gift or loan from family or friends

Mortgage rates have been volatile since 2020, currently standing at around 6.9% for a 30-year fixed-rate mortgage, a two-month high according to Freddie Mac.

During the same period, home values have surged by approximately 42%. Zillow reported that household incomes have not kept pace with the rising cost of homeownership.

Zillow stated that an income of about $106,500 is needed to afford the mortgage on an average home. First-time homebuyers are managing this by relying on gifts or loans from family or friends for at least part of their down payment.

Affordability varies widely by location. Cities like Pittsburgh, Cleveland, and Memphis require incomes below six figures to comfortably afford a home. In contrast, in Western cities like San Jose and San Francisco, incomes between $330,000 to $450,000 are needed.

Buffalo, New York, is expected to lead as the most robust housing market in 2024, according to Zillow.

Affordability is a key factor influencing the real estate market, with lower-cost markets in the Great Lakes, Midwest, and South regions gaining prominence in Zillow's 2024 rankings.

Anushna Prakash, a data scientist for Zillow Economic Research, highlighted the importance of affordable home prices and strong employment opportunities in driving housing market growth.

Prakash expressed cautious optimism about the housing market stabilizing in 2024, aiming to avoid the significant price spikes seen in the early pandemic and the rapid increases in mortgage rates in recent years.

Despite signs of improvement in the housing market for 2024, including a steady decline in mortgage rates over the past seven weeks leading to increased existing-home sales, experts anticipate that the shortage of homes for sale will persist.

Danielle Hale, chief economist for Realtor.com, noted that there might be more options for households in 2024 due to a slight increase in single-family home construction and the completion of numerous multifamily units primarily intended for rentals.