US Housing affordability pressures mount ahead of the midterms

Despite improving earlier in the year, housing affordability fell across all metros over the last quarter. While housing costs increased in most metros, the main driver of the decline was higher mortgage rates, which are now on an upswing. At more than double their 2021 level, interest costs have accounted for the highest share of escalating carrying costs over the last five years. Consequently, the deterioration in housing and related affordability has emerged as a key issue in the upcoming midterm elections.

The average household needs to earn $115,600 in income to afford median housing costs as of Q3, up from $111,500 in Q3 2025, and 75% more than the $66,200 needed five years ago. Only 38% of households earn enough to cover median housing costs, the same as a year ago, but well below the 53% that could afford the median home in Q3 2021. With mortgage rates rising, we expect that the average household will need more than $120,000 to afford median costs in the coming weeks.

Coastal California metros along with Honolulu remain the least affordable. The income needed to afford a median priced house, along with insurance and property taxes, for the five most expensive metros ranges from $262,000 to $473,000. In contrast, Midwest metros along with several in the South, upstate New York, and West Virginia are most affordable. Household income needed to afford median house costs in the five most affordable metros ranges from $50,700 to $69,400, highlighting the huge disparity in living costs across the country.

While affordability declined everywhere, some metros suffered more than others, as incomes climbed at a slower pace relative to costs. Combining income growth with housing cost dynamics shows that Texas metros recorded a more benign change in affordability, while many in Nebraska, Florida, and non-gateway areas incurred a steeper affordability drop