Affordability issues have stymied the housing market for the better part of the past decade, but it didn’t get worse in 2024. That’s the conclusion of a new report from Redfin, which said that housing affordability didn’t deteriorate further last year, the first time that’s happened in four years.
Taking the median U.S. income of $83,782 and comparing it to the median home price of $429,734, a household in that situation would have spent 41.8% of their income on housing in 2024. That’s a minor improvement from 42.2% in 2023 but higher than the typical number of of 30% or less during the 2010s.
Despite the recent improvement, Redfin noted that affordability challenges continue to persist and are likely to continue.
“Affordability improved ever so slightly this year because wage growth outpaced the growth in monthly housing payments, but that’s not to say buying a home became affordable,” Redfin senior economist Elijah de la Campa said in a statement.
“For many Americans, buying a home remains more out of reach than ever and that’s unlikely to change anytime soon. Even with inventory trending upwards, we still expect prices to continue rising in 2025 due to a lack of homes for sale — pushing more would-be homebuyers to rent instead.”
For the typical homebuyer to allocate 30% of their income to housing, they would need to have an annual income of $116,782, a record high. The median monthly housing payment hit $2,920 in 2024.
While Texas was a hot spot after the COVID-19 pandemic began, rising inventory and stalling home prices helped affordability to improve in 2024. Redfin data shows that the median income and home price in Austin would require a household to spend 39.6% of their income on housing, down from 42.8% in 2023.
San Antonio (35.4%), Dallas (38.9%) and Fort Worth (36.7%) each saw their share of income needed to afford the average home fall between 1.6 and 2.3 percentage points in the past year.
Redfin’s report is mildly encouraging, but 2025 housing market forecasts still expect home prices to rise. HousingWire’s forecast expects home-price appreciation of 3.5%. At the high end, Goldman Sachs predicts a 4.4% rise in home prices, while at the low end, Moody’s Analytics expects an increase of 0.3%.
