Since the housing boom ignited by the pandemic and ultra-low mortgage rates, the U.S. real estate market has struggled with a lack of supply and surging prices. Despite a slight easing in inventory, affordability remains a major challenge, particularly for lower- and middle-income buyers.
Nationally, home prices in March were 39% higher than in March 2019, according to the S&P CoreLogic Case-Shiller Index. While new listings have started to rise, they are not appearing at price points that most buyers can afford. The highest demand is for homes on the lower end of the market, but these remain scarce, pushing sales in affordable and mid-tier segments far below those at the luxury end.
A new report from the National Association of Realtors and Realtor.com sheds light on just how far out of reach the housing market has become. Using standard guidelines that assume 30% of income goes toward a 30-year fixed mortgage, the study finds a sharp decline in affordable options compared to pre-pandemic times.
For buyers earning between $75,000 and $100,000 annually, the share of listings they could afford increased slightly over the past year, rising from 20.8% to 21.2%. But back in March 2019, this group could afford nearly half – 48.8% – of homes for sale. In a balanced market, they should be able to afford 48% of all listings. Currently, about 416,000 more homes priced at or below $255,000 would be needed for balance.
The situation is even tougher for those making less than $75,000. A buyer with a $50,000 salary could only afford 8.7% of listings in March, down from 9.4% last year and a sharp drop from 27.8% in 2019. Meanwhile, households earning $250,000 or more have access to at least 80% of homes on the market.
“Shoppers see more homes for sale today than one year ago, and encouragingly, many of these homes have been added at moderate-income price points,” said Danielle Hale, chief economist at Realtor.com. “But as this report shows, we still don’t have an abundance of homes that are affordable to low- and moderate-income households.”
The increase in available homes has not been evenly spread across the country. The Midwest and South have seen the biggest improvements, while much of the rest of the nation continues to struggle.
Cities such as Akron, St. Louis, and Pittsburgh now offer a more balanced market with enough listings to meet local demand. Other areas like Raleigh, Des Moines, and Grand Rapids have made notable gains but still fall short of what buyers need. However, more than 40% of the 100 largest U.S. metro areas remain stuck in crisis, including Seattle and Washington, D.C., where a household needs over $150,000 a year just to afford half the homes for sale.
Some overheated markets, such as Austin, San Francisco, and Denver, have cooled and now feature more affordable listings than before the pandemic. Experts say this proves that new construction, market shifts, and local policies can help restore balance, even in the toughest markets.
Still, affordability is worsening in several regions, especially in Southern California cities like Los Angeles and San Diego, as well as New York City. Persistent underbuilding, limited land, high costs, zoning laws, and population growth are all contributing to the crunch. Homebuilders are trying to keep up, but rising construction expenses and policy changes could make things even tougher. In March, single-family housing starts were down nearly 10% year over year.
