Economy

Study Finds Over 75% of U.S. Homes Unaffordable for Typical Households

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Dec 10, 2025

THE BARE STORY

A new analysis from the personal finance firm Bankrate found that more than three-quarters of homes in the United States are unaffordable for a typical household. The study defined affordability as annual housing costs not exceeding 30% of a household's income. The findings point to a widening gap between average earnings and home prices, making homeownership increasingly difficult for many families.

According to the analysis, an annual income of $113,000 is needed to afford a median-priced home of approximately $435,000. This contrasts with the median U.S. household income in 2024, which was nearly $84,000, according to Census data. A Bankrate data analyst, Alex Gailey, stated that homeownership is feeling more like a luxury than a common milestone. In the nation’s most expensive cities, a household would need to earn at least $200,000 to afford a typical home, the firm said.

The housing market conditions have particularly affected first-time homebuyers, who constituted just 24% of sales last year, down from 50% in 2010, according to the National Association of Realtors. Data from the Federal Reserve Bank of St. Louis indicated that the U.S. homeownership rate was about 65% in 2025, a decrease from a peak of over 69% in 2004. A separate July analysis from Zillow suggested the U.S. has a shortage of 4.7 million housing units.

Some regional differences exist, with Gailey noting that parts of the South and West have seen increased home construction, while building has lagged in the Northeast and Midwest. Looking ahead, Realtor.com has forecasted that average mortgage rates may fall to 6.3% in 2026 from an average of 6.6% in 2025. This comes as the Federal Reserve is expected to cut interest rates.

Same Facts. Different Perspectives.

Two AI models. Two viewpoints. One factual foundation.

Perspective by Claude

• A significant majority of U.S. homes are financially out of reach for the typical household. A Bankrate analysis concluded that over 75% of American homes are unaffordable for a household with a typical income, defining affordability as housing costs not exceeding 30% of earnings. One analyst from the firm stated that this situation is making homeownership feel more like a luxury than a common milestone.

• There is a substantial gap between average earnings and the income required for homeownership. The study found that an annual income of $113,000 is needed to afford the median-priced U.S. home of approximately $435,000. This is significantly more than the median household income of nearly $84,000, and the income requirement rises to at least $200,000 in the nation’s most expensive cities.

• The rate of homeownership is declining, especially among first-time buyers. Data from the Federal Reserve Bank of St. Louis shows the U.S. homeownership rate fell to about 65% in 2025, down from a peak of over 69% in 2004. The impact on new buyers is particularly stark, as first-time homebuyers accounted for just 24% of sales last year, a dramatic decrease from 50% in 2010.

How it may affect me

As a U.S. reader:

• Households earning a typical income may find it difficult to buy a median-priced home, as the required salary is significantly higher than the national median income.

• First-time homebuyers face major challenges entering the market, which could lead more people to rent for longer as the share of new buyers has sharply declined.

• Your ability to find a new home may depend on your location, with construction lagging in the Northeast and Midwest compared to the South and West.

• A forecasted slight drop in mortgage rates by 2026 could offer minor relief for homebuyers, though the extent of this impact remains speculative.

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