U.S. Housing Affordability in 2024: A Slight Improvement Amid Record Challenges

A household earning the median U.S. income would need to spend 41.8% of their earnings on monthly housing costs to afford the typical home in 2024, a marginal improvement from 2023 but still the second-least affordable year on record. This is according to an analysis of median home sale prices, mortgage rates, and household incomes. While a slight dip in average mortgage rates provided some relief, the income required to afford a median-priced home hit a record high of $116,782, far exceeding the median household income of $83,782. This guide breaks down the key affordability metrics and explores the most and least affordable housing markets in the country.

What Is the Current State of U.S. Housing Affordability?

The core measure of housing affordability is the percentage of a household's income needed to cover monthly housing payments for a median-priced home. A common rule of thumb in personal finance is to spend no more than 30% of income on housing. In 2024, that figure reached 41.8% for the typical U.S. household. This indicates a significant affordability gap, meaning the average American would be considered "house poor," spending a disproportionate share of their income on housing.

This slight improvement from 42.2% in 2023 is primarily attributed to modest wage growth slightly outpacing the increase in monthly housing payments. The average 30-year fixed mortgage rate in 2024 was 6.72%, down from 6.81% in 2023. However, the median monthly housing payment still climbed to a record $2,920, underscoring the persistent financial pressure on buyers.

How Much Income Do You Need to Buy a Home in 2024?

To adhere to the 30% housing cost guideline, a homebuyer needed an annual income of at least $116,782 to afford the median-priced home of $429,734. This calculation assumes a 15% down payment and includes principal, interest, property taxes, and homeowners insurance (often referred to as PITI). This required income is approximately $33,000 higher than the actual median U.S. household income, marking the fourth consecutive year that the income needed for an affordable purchase has surpassed what most households earn.

Which Metros Saw the Biggest Shifts in Affordability?

Housing affordability trends varied significantly across the country in 2024, with improvements concentrated in certain markets.

• Markets with Improved Affordability: Affordability improved in 25 of the top 50 metropolitan areas. Texas metros led the way, with Austin seeing the most significant improvement. A household with the median income there would spend 39.6% of their income on housing, down from 42.8% in 2023. This was followed by San Antonio, Dallas, and Fort Worth, where an increase in housing construction has helped ease price pressures.
• Markets with Worsened Affordability: On the other end of the spectrum, affordability decreased most sharply in Anaheim, California. A median-income household would need to spend 75.9% of their income on housing, up from 71.8% in 2023. This was largely due to a 12.4% surge in home prices. Other metros where affordability declined include Chicago, Miami, and Newark, New Jersey.

What Are the Most and Least Affordable Major U.S. Metros?

The analysis reveals a stark geographic divide in housing costs.

The five least affordable major metros are all in California, where high home prices relative to local incomes create a severe affordability crisis. New York is the least affordable metro outside of California.

In contrast, the most affordable markets are primarily located in the Rust Belt, where home prices remain below the national median.

Buying a home in 2024 required a historically high income, and while the situation improved fractionally, affordability remains a major challenge for the average American. The outlook suggests continued pressure on prices due to a limited supply of homes for sale. For many would-be buyers, exploring more affordable regions or delaying a purchase may be the most viable path forward based on current market conditions.