A Welcome Shift for Homebuyers: Affordability Is Starting to Improve

After years of tough headlines and stretched budgets, there’s finally some encouraging news for hopeful homebuyers. The cost of buying a home is beginning to ease.

Monthly mortgage payments are coming down, and the pressure buyers have been feeling is slowly starting to lift. This doesn’t mean housing is suddenly inexpensive or that everyone can jump into the market overnight but after how challenging things have been, even modest progress is meaningful.

Affordability Is Finally Heading the Right Way

One of the clearest ways to measure affordability is by looking at how much of a household’s income goes toward housing costs. Zillow defines housing as “affordable” when total monthly expenses such as your mortgage payment, property taxes, insurance, and basic upkeep take up no more than 30% of your income. Over the past few years, that percentage climbed well beyond that benchmark, putting homeownership out of reach for many buyers.

Now, that trend is starting to reverse. Recent Zillow data shows that the typical household is spending a smaller share of its income on housing than it did just a few years ago. While we’re not fully back to that 30% comfort zone, the improvement is real and it’s moving in the right direction.

What’s Driving the Improvement?

Lower mortgage rates have grabbed most of the attention lately, and for good reason. Rates have dropped from recent highs, helping bring monthly payments down. But that’s only part of the story. Several factors are working together to give buyers some much-needed relief:

-Mortgage rates have cooled
Rates are hovering near their lowest point in more than three years, which directly reduces monthly housing costs.

-Home price growth has slowed
While home prices aren’t declining nationwide, they’re rising at a much more manageable pace than they were a few years ago. That slower growth makes purchases more predictable and payments easier to handle.

-Income growth is outpacing home prices
This may be the most important shift of all. As First American Chief Economist Mark Fleming explains, when wages rise faster than home prices, buyers gain purchasing power even if rates don’t fall dramatically. 

All of this helps explain why buying a home today looks slightly more achievable than it did even a year ago. The same forces that squeezed affordability for so long are finally beginning to loosen. Fleming sums it up well: “Affordability remains challenging, but for the first time in several years, the underlying forces are finally aligned toward gradual improvement… Affordability won’t snap back overnight, but like a ship finally catching a steady tailwind, it’s now sailing in the right direction.” Because of these combined trends, economists expect affordability to continue improving into 2026.

Where Affordability Is Improving First

Of course, affordability isn’t changing at the same pace everywhere. Zillow reports that some markets may fall back under the 30% affordability threshold by the end of the year.

That doesn’t mean you have to wait or live in one of those specific areas to benefit. Many other markets are already seeing meaningful improvements. That’s why working with a local real estate expert such as myself matters. We can help you understand what’s happening where you live and whether buying is more realistic than you might expect.

For the first time in quite a while, buying a home is becoming a little more affordable. That’s a significant shift. And since these changes aren’t happening evenly across the country, paying attention to local trends can make all the difference. The opportunity to buy may be closer than you think. Reach out today and let’s discuss your goals.