Households Need ~$117K Income to Afford the Average U.S. Home

Housing affordability is still broken. Redfin now estimates that U.S. households need an annual income of roughly $117,000 to afford the average home, a gap of nearly $30,000 above what the typical American household actually earns.

The affordability gap

Redfin pegs the required income at $116,780, down from a mid-2025 peak of about $122,000 but still well above wage levels. Median household income sat near $88,000 in April, leaving buyers roughly $30,000 short of what is needed to comfortably purchase.

By Redfin’s math, a household earning the average U.S. income would need to spend about 40% of its pay on the median-priced home, versus the 30% level financial planners consider affordable.

Home prices and rates

The typical U.S. property now costs close to $418,000, according to the National Association of Realtors. Bankrate’s parallel study found the income bar has jumped nearly 50% since early 2020, when $78,236 was enough to afford a typical home.

The culprits are familiar: home prices at record highs and 30-year mortgage rates that climbed from 3.68% in January 2020 to north of 7% in January 2025 before easing modestly in 2026.

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Geography matters

There is no single national housing market. Homebuyers in 30 states plus D.C. now need a six-figure income to afford the typical home, up from just six states in 2020.

San Jose sits at the extreme end, requiring roughly $426,000 in household income. On the other side, Detroit buyers need about $56,219, below the city’s median income of $65,687.

Why it matters for markets

Affordability at these levels caps existing-home turnover, pressures first-time buyer volume, and keeps a lid on discretionary spending from would-be homeowners. First-time buyers made up just 24% of sales last year, down from 50% in 2010, and the U.S. is still short roughly 4.7 million housing units per Zillow’s July analysis.

Lower mortgage rates in early 2026 delivered the most affordable quarter in three years on a national basis, but the setup remains fragile if rates back up again.

Options market and stocks to watch

Traders looking for the read-through across housing and mortgage exposure should keep these names on the radar:

• DHI: D.R. Horton, the largest U.S. homebuilder, is directly exposed to affordability trends and first-time buyer demand.
• LEN: Lennar sits in the same bucket, with heavy incentive activity used to bridge the affordability gap.
• Z: Zillow’s traffic and lead-gen volumes track directly with buyer engagement.
• RKT: Rocket Companies is a pure-play on mortgage origination volume, which is highly rate-sensitive.
• HD: Home Depot leverages both existing-home turnover and new construction activity.

Watch for flow around homebuilder ETFs and mortgage originators if rates continue to drift lower into the back half of 2026.

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