Housing affordability has improved, but not by much

• US homebuyers need to make $114,000 a year to afford a median-priced home, Redfin says.
• Analysts said median home prices have risen twice as fast as the increase in median household incomes in the last year.

Mortgage rates have eased from multi-decade highs hit late last year, but housing affordability hasn't improved much in 2024.

According to Redfin, prospective buyers in the US need to make $114,000 a year to afford the median-priced home. That's 35% more than the typical US household median income of $84,072.

While that income level is an improvement from last October when buyers needed to earn $121,000, the latest number marks the biggest year-over-year surge since August. It's also a 39% jump from February 2022, and 74% higher than February 2021.

"For over a decade, America has been slowly marching toward a housing affordability crisis due to chronic underbuilding, and that crisis was kicked into overdrive when the pandemic homebuying boom fueled a meteoric rise in housing prices," said Redfin senior economist Elijah de la Campa.

In terms of location, buyers in San Antonio, Texas only needed to earn 1% more than last year to afford a typical home in February – the smallest increase among metro areas. On the flip side, buyers in Anaheim, California were hit by the nation's biggest housing affordability crunch, as they needed 20% more income compared to the previous year.

The median home price has climbed twice as much as the 6% rise in median household income over the past year. Redfin said.

"We're slowly climbing our way out of an affordability hole, but we have a long way to go. Rates have come down from their peak, and are expected to fall again by the end of the year, which should make homebuying a little more affordable and incentivize buyers to come off the sidelines," Campa said.