LOS ANGELES — Home ownership is receding further out of reach for most Americans as elevated mortgage rates and rising prices stretch the limits of what buyers can afford.
A homebuyer now needs to earn at least $114,000 a year to afford a $431,250 home — the national median listing price in April, according to data released Thursday by Realtor.com
The analysis assumes that a homebuyer will make a 20% down payment, finance the rest of the purchase with a 30-year fixed-rate mortgage, and that the buyer’s housing costs won’t exceed 30% of their gross monthly income — an often-used barometer of housing affordability.
Based off the latest U.S. median home listing price, homebuyers need to earn $47,000 more a year to afford a home than they would have just six years ago. Back then, the median U.S. home listing price was $314,950, and the average rate on a 30-year mortgage hovered around 4.1%. This week, the rate averaged 6.76%.
The annual income required to afford a median-priced U.S. home first crossed into the six figures in May 2022 and hasn’t dropped below that level since. Median household income was about $80,600 annually in 2023, according to the U.S. Census bureau.
In several metro areas, including San Francisco, Los Angeles, New York and Boston, the annual income needed to afford a median-priced home tops $200,000. In San Jose,