The income threshold for buying a home has declined for two consecutive years. Falling mortgage rates and rising household income have pushed the earnings needed to purchase a median-priced home to $111,252 — down from $115,870 in 2024 and $120,669 in 2023. Housing analysts generally consider a monthly payment at or below 30% of household income to be affordable.
The numbers tell a more complicated story, though. The median household income sits just above $86,000 a year, still short of what’s needed to comfortably afford a median-priced home. And while the gap between renting and buying costs is narrowing in most major metros, renting isn’t getting cheaper: the annual income required to afford the median rental rose from $74,464 in 2024 to $76,020 in 2025. A roughly 4% increase in median household income over the same period has helped offset that rise.
Mortgage rates are a key driver of the shift. Rates have dropped from nearly 7% a year ago to about 6.1%, reducing a typical monthly mortgage payment by roughly $125. The current market also has more sellers than active buyers, giving buyers more room to negotiate on price and concessions than they’ve had in recent years.
Recent conditions reflect just how much the market changed during the pandemic years. The national median sale price climbed from $317,100 in Q2 2020 to a peak of $437,700 in Q2 2022, a 38% increase in two years. Prices have since eased to $410,800 as of Q2 2025 but remain nearly 30% above pre-pandemic levels. Starter homes followed a similar path, rising from $95,000 in 2012 to $165,000 in 2019 and reaching $250,000 in 2024.
Housing economists project that affordability could return to more typical historic levels by 2030 if mortgage rates ease to around 5.5% and home price growth stabilizes. In the near term, the trend is moving toward greater accessibility, though the pace remains gradual.
This post was based on information found on Puget Sound Business Journal.
