The housing market has been plagued by affordability issues for most of the past decade, but there was some relief in 2024. According to a new report from Redfin, housing affordability did not worsen last year, marking the first time in four years.
Based on the median U.S. income of $83,782 and the median home price of $429,734, a household in that situation would have spent 41.8% of their income on housing in 2024. While this is a slight improvement from 42.2% in 2023, it is still higher than the typical affordability threshold of 30% or less seen during the 2010s.
Despite this marginal improvement, Redfin pointed out that affordability challenges persist and are expected to continue.
Redfin’s senior economist, Elijah de la Campa, stated, “Affordability improved slightly this year as wage growth outpaced the growth in monthly housing payments, but that doesn’t mean buying a home became more affordable. For many Americans, homeownership remains increasingly out of reach, and this trend is likely to persist. Even with an increase in inventory, home prices are projected to keep rising in 2025 due to a lack of available homes for sale, leading more potential buyers to opt for renting instead.”
For a typical homebuyer to stick to the recommended 30% of income allocated to housing, they would need to earn a record-high annual income of $116,782, with the median monthly housing payment reaching $2,920 in 2024.
While Texas experienced a housing boom after the onset of the COVID-19 pandemic, increased inventory and stabilized home prices contributed to improved affordability in 2024. Redfin data shows that in Austin, a household would need to allocate 39.6% of their income to housing, down from 42.8% in 2023.
San Antonio (35.4%), Dallas (38.9%), and Fort Worth (36.7%) also saw a decrease in the percentage of income needed to afford the average home by 1.6 to 2.3 points in the past year.
While Redfin’s report provides some hope, forecasts for the 2025 housing market still predict a rise in home prices. HousingWire anticipates a 3.5% increase in home prices, with Goldman Sachs forecasting a 4.4% rise and Moody’s Analytics predicting a 0.3% increase.
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