In 2024, the U.S. housing market witnessed a marginal easing in affordability pressures, marking the first time in four years that conditions haven’t worsened. This shift is a slight relief in a period characterized by escalating housing costs and stagnant income growth, as evidenced by a new analysis.
The analysis reveals that households earning the median U.S. income spent 41.8% of their earnings on monthly housing costs for a typical home in 2024, down from 42.2% in 2023. While this change represents a modest improvement, the year remains one of the least affordable on record, only surpassed by 2023.
To prevent monthly housing payments from exceeding 30% of their income, prospective homebuyers in 2024 needed to earn a minimum of $116,782 annually. This figure is significantly higher than the median household income, which was $83,782. In this context, the average monthly housing payment reached a record $2,920, reflecting a 4.3% increase since 2023 and an 86% increase since 2019.
According to Redfin Senior Economist Elijah de la Campa, “Affordability improved ever so slightly this year because wage growth outpaced the growth in monthly housing payments.” However, he cautioned that housing remains largely unaffordable for many Americans, a situation that is unlikely to change soon due to limited housing supply and rising prices.
Indeed, home prices are expected to continue climbing in 2025, prompting more would-be buyers to opt for renting instead. Mortgage rates, averaging 6.72% in 2024, slightly decreased from 6.81% in 2023, contributing to the marginal improvement in affordability. Despite this, 2024 marked the fourth consecutive year where the income required for affordable housing payments exceeded the median household income.
The analysis further identified geographic disparities in affordability. Texas metros showed the most significant enhancements, with Austin leading the way. A household earning the median income in Austin in 2024 spent 39.6% of their earnings on housing, down substantially from 42.8% in 2023. Other Texas metros like San Antonio, Dallas, and Fort Worth also recorded improvements.
Conversely, housing affordability deteriorated in cities like Anaheim, which saw the biggest decrease among the top 50 U.S. metropolitan areas. The median income here required households to spend 75.9% of their earnings on housing costs, compared to 71.8% in 2023. This trend was mirrored in other metros such as Chicago, Miami, Newark, and San Jose, where home prices surged above the national growth rate.
California dominated the list of the least affordable metros, with Los Angeles, San Francisco, and Anaheim as prime examples. In Los Angeles, individuals spent 77.6% of their income on housing if they earned the median income, while in Rust Belt cities like Pittsburgh and Detroit, housing costs demanded only around 25% of median earnings, maintaining relative affordability.
Despite a minor improvement in affordability in 2024, the housing market remains challenging for many Americans. With incomes lagging behind rising prices, affordability is likely to remain a pressing issue. Regional differences further complicate the landscape, as some areas experience more favorable conditions while others worsen. As we move into 2025, the ongoing rise in home prices and limited supply will likely continue pushing the dream of homeownership further out of reach for numerous individuals.
Source: Redfin
