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In 2026, housing affordability and new home construction remain concentrated in specific US regions. States in the South and Midwest lead the nation by earning all the top grades (A's and B's) for balancing current affordability with robust homebuilding efforts. Conversely, states in the West and Northeast, often constrained by complex zoning regulations, received the lowest grades (D's and F's). This analysis provides a state-by-state assessment based on current market conditions and future supply growth, offering a clear picture for prospective buyers and policymakers alike.
A state's final grade is a weighted average of its performance in two key areas: current affordability and homebuilding activity. The affordability score, which accounts for 50% of the total, combines two metrics. The first is the REALTORS® Affordability Score (a measure of what percentage of for-sale inventory is affordable to households across the income spectrum). The second metric calculates the share of a median household's income needed for a mortgage on a median-priced home. The homebuilding score, making up the other 50%, evaluates the permit-to-population ratio (40%)—which shows if a state is building homes relative to its population size—and the new-construction premium (10%), which measures the price difference between new and existing homes. Lower premiums indicate more competitively priced new inventory.
The top-performing states demonstrate strength in either affordability or construction, and in rare cases, both. South Carolina earned the sole A grade, primarily due to its top-tier homebuilding scores, which helped offset a middling affordability ranking. Iowa and Texas both received A- grades, but for different reasons. Iowa dominated affordability metrics but had weaker construction numbers, while Texas excelled in its permit-to-population ratio, building enough to overcome current affordability challenges. All states receiving B grades were also located in the South and Midwest, where more available land and lower prices facilitate both affordability and construction.
States in the West and Northeast face systemic challenges that result in lower grades. The primary issue is a combination of high land costs and restrictive zoning policies. For example, complex zoning codes in states like Massachusetts create significant barriers. These regulations increase costs for builders, which are passed on to homebuyers, and often severely limit where multi-family housing can be built. This artificial restriction on supply, coupled with high demand, leads to severe affordability issues. While some Western states are building at a solid pace, their high home prices drag down their overall scores, highlighting the acute challenges on both the Pacific and Atlantic coasts.
For those looking to purchase a home, a state's grade offers valuable insight. States with high marks may present more viable opportunities for first-time buyers to find a home that fits their budget, often with a greater selection of new constructions that may include incentives. In contrast, states with lower grades may require a longer path to homeownership, potentially involving extended periods of renting. Based on our experience assessment, success in these markets often demands greater financial planning and patience. The regional disparities underscore that housing is inherently local, and your location choice will significantly impact your buying journey.
The path to improving housing affordability nationwide hinges on addressing supply constraints. Lessons from top-graded states like South Carolina, Texas, and Iowa point to the importance of more permissive zoning and a focus on delivering competitively priced new homes. For communities and policymakers, the imperative is clear: removing barriers to construction is essential to closing the housing supply gap and making homeownership a more attainable goal for Americans in every state.
