Where Can the Middle Class Afford a Home? 2025 State-by-State Analysis

Based on an analysis of 2023 U.S. Census Bureau data and current mortgage rates, middle-class families can realistically afford a median-priced home in only 20 states. This affordability crisis, driven by high listing prices and mortgage rates, means households in 30 states would need to exceed the recommended spending threshold to purchase a home. However, emerging trends like increasing inventory and rising price reductions are creating new opportunities for buyers in 2025.

What Is the Current State of Housing Affordability?

Housing affordability is a measure of whether a typical household can qualify for a mortgage on a typical home without spending more than a recommended percentage of their income. A common benchmark is that housing costs should not exceed 30% of a household's gross income. Our assessment, based on a 30-year fixed mortgage rate of 6.67% with a 10% down payment, shows a significant gap between median household income and median home prices in most of the country.

The following table illustrates the states where the median household income is sufficient to afford the median-priced home, based on our experience assessment. A positive "Affordability Gap" indicates the median income can cover more than the median price, making homeownership feasible.

Note: Data sourced from SmartAsset analysis of 2023 U.S. Census Bureau data. The affordable mortgage amount is an estimate based on stated loan assumptions.

How Is "Middle Class" Defined for This Analysis?

To understand these findings, it's important to define "middle class." According to Pew Research, the middle class includes households earning between two-thirds and double the median household income of their state. For example, with a national median income of approximately $75,000, a middle-class household would earn between $50,000 and $150,000. In high-cost states like Massachusetts, the middle-class income range is much higher, starting at over $66,000. This definition contextualizes the financial challenge, as a six-figure salary is now required to be considered middle class in many states.

What Are the Positive Trends for Home Buyers in 2025?

Despite the current challenges, 2025 shows promising signs for buyers. Market dynamics are shifting:

• Increasing Inventory: More new construction homes are entering the market.
• Price Reductions: Listing prices are beginning to soften in previously hot markets like Phoenix, AZ, and Albuquerque, NM.
• Longer Market Time: Homes are spending more days on the market, which can give buyers more negotiating power.

These trends suggest that affordability may improve as the year progresses, potentially adding more states to the "affordable" list.

While the dream of homeownership feels out of reach for many, strategic planning is key. Focus on improving your credit score to secure the best possible mortgage rate and save for a larger down payment to lower your monthly obligations. Most importantly, be prepared to act when you find a home that fits your budget, as the market can change quickly.