Significant Rise in Income Required to Buy a Home in the U.S. Over Last Six Years

Rising Affordability Challenges in Home Buying

In the current housing landscape, Americans face unprecedented challenges when it comes to purchasing homes. According to the latest report from Realtor.com, the annual income required to buy a median-priced home in the United States has surged to $114,000. This is a staggering 70.1% increase from $67,000 just six years ago, reflecting the dramatic rise in home prices across the country.

Current Market Dynamics

As of April 2025, the median listing price for homes is now $431,250, representing a 1.5% rise from March 2025 and a substantial 36.9% increase since April 2019. These figures underscore the difficulties potential buyers face in accessing affordable housing. With pending home sales declining for the fourth consecutive month, down 3.2% year-over-year, the market is displaying signs of strain. Active listings, however, have increased by 30.6% compared to last year, suggesting that supply may finally be catching up with demand.

The Economic Landscape of Home Buying

The required income figure of $114,000 is based on a 30-year fixed mortgage with a 20% down payment and assumes that no more than 30% of gross monthly income is spent on housing. The rise in this threshold can largely be attributed to escalating home prices coupled with elevated mortgage rates, which have compounded the affordability crisis.

In some areas, the income required to afford a home is even higher. For instance, in the San Jose area, homebuyers need to earn a staggering $370,069 annually to afford the median home price. This is a 54.3% increase since April 2019. Other major metropolitan areas, including San Francisco and Los Angeles, also reflect similarly daunting requirements, putting the dream of homeownership out of reach for many.

Changes in Buyer Dynamics

Despite these challenges, there are emerging positive trends in the market that could benefit homebuyers. As the inventory of homes increases and more sellers are making price adjustments, buyers are starting to gain a bit more leverage. In fact, price reductions can now be observed in 18% of listings, indicating that sellers may be more willing to negotiate. Danielle Hale, Chief Economist at Realtor.com, suggests that these shifts could present opportunities for prepared buyers amid the ongoing affordability hurdles.

Moreover, the increase in active listings, now reaching over 959,251, surpasses figures from April 2020, signaling a robust recovery in market options despite still being 16.3% below the norms of 2017-2019. The West and South regions lead in active listings growth, with cities like San Diego and San Jose reporting significant increases that provide hope for would-be homebuyers.

Conclusion

The current real estate climate presents both daunting challenges and emerging opportunities for potential homeowners. The dramatic increase in required income to afford a median home highlights systemic issues within the housing market, yet rising inventory levels and adjustments in seller behavior might provide a glimmer of hope. As we progress through 2025 and into the typically more active summer housing market, future developments will be closely watched by industry experts and prospective buyers alike. The balance between supply and demand could be shifting, fostering a market that eventually tilts in favor of those seeking to purchase their dream homes.