Homebuyers Must Earn $115,000 to Afford the Typical U.S. Home. That’s About $40,000 More Than the Typical American Household Earns.

by Real estate financingMission+
17 minutes read

Sky-high mortgage rates and still-rising home prices have made it harder than ever to afford a home, especially for first-time buyers. The typical buyer needs to earn 15% more than they did a year ago–and wages are only up 5%.

It’s harder than ever for Americans to afford a home. 

A homebuyer must earn $114,627 to afford the median-priced U.S. home, up 15% ($15,285) from a year ago and up more than 50% since the start of the pandemic. That’s the highest annual income necessary to afford a home on record. 

This is based on a Redfin analysis that compares median monthly mortgage payments for homebuyers in August 2023 and August 2022. The national income data in this analysis is adjusted for inflation. See the bottom of this report for more on methodology. 

Housing costs are higher than ever because of the one-two punch of sky-high mortgage rates and rising home prices. The average rate on a 30-year fixed mortgage was 7.07% in August. Mortgage rates have climbed even higher since then, hitting 7.57% during the week ending October 12–their highest level in over two decades. But even though soaring mortgage rates have dampened demand, low inventory is causing home prices to increase. The typical U.S. home sold for about $420,000 in August, up 3% year over year and just about $12,000 shy of the all-time high hit in mid-2022. 

The typical U.S. homebuyer’s monthly mortgage payment is $2,866, an all-time high. That’s up 20% from $2,395 a year earlier, and by that time payments had already increased substantially from the beginning of the pandemic, a time of ultra-low mortgage rates and yet-to-skyrocket home prices. In August 2020, for instance, the typical monthly payment was $1,581, based on that month’s average mortgage rate of 2.94% and median home price of $329,000. At that time, a homebuyer would have needed to earn $75,000 per year to afford the typical home. 

The typical American household earns about $40,000 less than the income needed to buy a median-priced home. The median household income was roughly $75,000 in 2022, the most recent year for which annual income data is available. Hourly wages have risen in 2023, but not nearly as fast as the income necessary to afford a home is rising: The average U.S. hourly wage has increased by about 5% over the last year. 

“In a homebuyer’s ideal world, rising mortgage rates would push demand and home prices down enough to make up for high interest payments. But that’s not what’s happening now: Although new listings are ticking up slightly, inventory is still near record lows as homeowners hang onto their low mortgage rates–and that’s propping up prices,” said Redfin Economics Research Lead Chen Zhao. “Buyers–particularly first-timers–who are committed to getting into a home now should think outside the box. Consider a condo or townhouse, which are less expensive than a single-family home, and/or consider moving to a more affordable part of the country, or a more affordable suburb.”

Affordability is less of a problem for all-cash and move-up buyers. The major increase in income necessary to afford a home hits first-time homebuyers hardest. Buyers who can afford to pay cash aren’t impacted by high mortgage rates, and they likely earn more than the income necessary to purchase a home, anyway. Buyers who are selling a home to buy another one are in a better boat than first-timers because they have likely built up equity in their current home, which takes a bit of the sting out of soaring monthly payments. The caveat to the caveat is those who bought at the height of the pandemic-era market with an ultra-low mortgage rate and need to sell now: Not only are they giving up a low rate, they also may have lost money on their home. 

Metro-level highlights: Income needed to buy a home has risen in all major metros, with biggest uptick in Miami and smallest in Austin

August 2023, analysis includes 100 most populous U.S. metros for which data is available. Note that year-over-year increases in income needed to afford a home in the metro section is not adjusted for inflation.

    • Metros where necessary income has increased most: In both Miami and Newark, NJ, homebuyers must earn 33% more than a year ago to afford the typical home–the biggest percent increase of the major U.S. metros. Homebuyers in Miami need to earn $143,000 annually to afford the area’s typical monthly mortgage payment of $3,580, and Newark buyers need to earn roughly $160,000 to afford that area’s $3,989 payment.
    • Other metros where necessary income has increased by over 30%: The income necessary to afford a median-priced home has increased by over 30% in four other metros, all in the eastern half of the country: Bridgeport, CT ($183,000); Dayton, OH ($60,000); Rochester, NY ($66,000); and Hartford, CT ($95,000). 
    • Buyers need to earn more in every major metro: Skyrocketing mortgage rates have caused the income necessary to buy a home to increase in every major metro, even the places where prices have declined over the last year. 
    • Necessary income has increased least in pandemic homebuying hotspots: Austin, TX homebuyers must earn $126,000 to afford the median-priced home, 8% more than a year ago–the smallest increase of all the major U.S. metros. That’s despite Austin home prices falling 7% year over year in August after they skyrocketed during the pandemic, with remote workers flocking in. Boise, ID, another pandemic homebuying hotspot where demand has since dropped, experienced the next-smallest increase: up 9% to $127,000. Salt Lake City, Fort Worth, TX and Lakeland, FL come next, with year-over-year increases of about 13% each. Home prices are down from a year ago in all those metros.
    • Homebuyers must earn six figures to buy a home in half the major metros in the country:  In 50 of the 100 metros in this analysis, buyers must earn at least $100,000 to afford the median-priced home in their area. Buyers must earn at least $50,000 everywhere in the country. 
    • Bay Area buyers must earn $400,000: Buyers in the most expensive markets in the country–San Francisco and San Jose, CA–must earn more than $400,000 to afford the median-priced home in their area, both up nearly 25% year over year. The next five metros are all in California: Anaheim ($300,000), Oakland ($250,000), San Diego ($241,000), Los Angeles ($237,000) and Oxnard ($233,000). 
    • Rust Belt buyers need the  least income–but it’s still up from a year ago: Detroit homebuyers must earn about $52,000 to afford the area’s median-priced home, up 19% from a year ago. That’s the lowest income required to afford a home in the U.S. Next come three Ohio metros (Akron, Dayton and Cleveland) and Little Rock, AR, all of which require roughly $60,000 in annual income to buy a home. 
Metro-level summary: Annual income needed to afford a home, August 2023

Analysis is based on 100 most populous U.S. metros for which data is available

Alphabetical order

U.S. metro area Annual income required to afford median-priced home  YoY change, annual income required to afford median-priced home Median monthly mortgage payment Median home-sale price
Akron, OH  $59,702 18.4% $1,493 $218,900
Albany, NY  $87,276 26.0% $2,182 $320,000
Allentown, PA  $88,639 23.2% $2,216 $325,000
Anaheim, CA  $300,010 28.6% $7,500 $1,100,000
Atlanta, GA  $107,731 19.4% $2,693 $395,000
Austin, TX  $126,208 7.7% $3,155 $462,748
Bakersfield, CA  $100,258 22.2% $2,506 $367,600
Baltimore, MD  $103,640 21.1% $2,591 $380,000
Baton Rouge, LA  $71,184 21.5% $1,780 $261,000
Birmingham, AL  $76,912 16.3% $1,923 $282,000
Boise City, ID  $126,869 9.1% $3,172 $465,170
Boston, MA  $194,188 22.7% $4,855 $712,000
Bridgeport, CT  $182,734 32.1% $4,568 $670,000
Buffalo, NY  $70,093 25.1% $1,752 $257,000
Camden, NJ  $91,367 27.8% $2,284 $335,000
Cape Coral, FL  $108,249 16.9% $2,706 $396,900
Charleston, SC  $112,231 17.9% $2,806 $411,500
Charlotte, NC  $108,822 16.0% $2,721 $399,000
Chicago, IL  $91,367 25.7% $2,284 $335,000
Cincinnati, OH  $77,730 27.5% $1,943 $285,000
Cleveland, OH  $61,536 22.1% $1,538 $225,625
Columbus, OH  $90,276 23.8% $2,257 $331,000
Dallas, TX  $115,913 15.0% $2,898 $425,000
Dayton, OH  $60,002 31.2% $1,500 $220,000
Denver, CO  $158,187 17.3% $3,955 $579,999
Des Moines, IA  $79,094 25.0% $1,977 $290,000
Detroit, MI  $51,793 19.4% $1,295 $189,900
El Paso, TX  $69,548 23.6% $1,739 $255,000
Elgin, IL  $92,730 27.6% $2,318 $340,000
Fort Lauderdale, FL  $114,549 22.2% $2,864 $420,000
Fort Worth, TX  $98,185 13.2% $2,455 $360,000
Frederick, MD  $145,407 18.1% $3,635 $533,140
Fresno, CA  $114,275 23.4% $2,857 $418,995
Gary, IN  $72,125 18.3% $1,803 $264,450
Grand Rapids, MI  $88,639 24.0% $2,216 $325,000
Greensboro, NC  $76,503 23.1% $1,913 $280,500
Greenville, SC  $87,821 18.9% $2,196 $322,000
Hartford, CT  $94,640 30.2% $2,366 $347,000
Honolulu, HI  $188,188 15.9% $4,705 $690,000
Houston, TX  $92,185 15.6% $2,305 $338,000
Indianapolis, IN  $81,794 23.7% $2,045 $299,900
Jacksonville, FL  $99,549 15.2% $2,489 $365,000
Kansas City, MO  $89,185 23.1% $2,230 $327,000
Knoxville, TN  $102,276 28.1% $2,557 $375,000
Lake County, IL  $95,458 28.9% $2,386 $350,000
Lakeland, FL  $88,639 13.4% $2,216 $325,000
Las Vegas, NV  $113,186 14.9% $2,830 $415,000
Little Rock, AR  $62,729 13.9% $1,568 $230,000
Los Angeles, CA  $237,281 19.8% $5,932 $870,000
Louisville, KY  $73,612 20.8% $1,840 $269,900
McAllen, TX  $68,184 29.8% $1,705 $249,999
Memphis, TN  $79,094 16.3% $1,977 $290,000
Miami, FL  $143,187 33.4% $3,580 $525,000
Milwaukee, WI  $87,548 28.8% $2,189 $321,000
Minneapolis, MN  $103,640 19.5% $2,591 $380,000
Montgomery County, PA  $130,886 28.3% $3,272 $479,900
Nashville, TN  $124,095 19.0% $3,102 $455,000
Nassau County, NY  $177,279 20.0% $4,432 $650,000
New Brunswick, NJ  $141,823 26.9% $3,546 $520,000
New Haven, CT  $91,367 21.8% $2,284 $335,000
New Orleans, LA  $75,003 15.1% $1,875 $275,000
New York, NY  $197,734 20.5% $4,943 $725,000
Newark, NJ  $159,551 33.4% $3,989 $585,000
North Port, FL  $123,888 17.4% $3,097 $454,240
Oakland, CA  $249,554 17.0% $6,239 $915,000
Oklahoma City, OK  $71,457 19.1% $1,786 $262,000
Omaha, NE  $83,185 25.8% $2,080 $305,000
Orlando, FL  $108,597 18.5% $2,715 $398,175
Oxnard, CA  $233,190 23.6% $5,830 $855,000
Philadelphia, PA  $75,003 16.3% $1,875 $275,000
Phoenix, AZ  $121,368 13.6% $3,034 $445,000
Pittsburgh, PA  $64,639 22.5% $1,616 $237,000
Portland, OR  $149,023 15.6% $3,726 $546,400
Providence, RI  $125,459 28.9% $3,136 $460,000
Raleigh, NC  $120,004 17.4% $3,000 $440,000
Richmond, VA  $102,276 24.6% $2,557 $375,000
Riverside, CA  $151,369 17.6% $3,784 $555,000
Rochester, NY  $65,866 30.7% $1,647 $241,500
Sacramento, CA  $156,824 17.8% $3,921 $575,000
Salt Lake City, UT  $139,096 13.0% $3,477 $510,000
San Antonio, TX  $87,273 14.5% $2,182 $319,990
San Diego, CA  $241,372 28.7% $6,034 $885,000
San Francisco, CA  $404,332 23.2% $10,108 $1,482,500
San Jose, CA  $402,287 24.8% $10,057 $1,475,000
Seattle, WA  $214,904 18.3% $5,373 $787,956
St. Louis, MO  $70,912 21.0% $1,773 $260,000
Stockton, CA  $144,550 15.2% $3,614 $530,000
Tacoma, WA  $149,855 17.7% $3,746 $549,450
Tampa, FL  $103,613 17.3% $2,590 $379,900
Tucson, AZ  $99,549 21.3% $2,489 $365,000
Tulsa, OK  $69,548 23.6% $1,739 $255,000
Virginia Beach, VA  $93,003 25.9% $2,325 $341,000
Warren, MI  $82,571 21.4% $2,064 $302,749
Washington, DC  $150,005 23.0% $3,750 $550,000
West Palm Beach, FL  $125,459 24.4% $3,136 $460,000
Wilmington, DE  $90,412 21.5% $2,260 $331,500
Worcester, MA  $118,640 23.4% $2,966 $435,000

Methodology

This is based on a Redfin analysis that compares median monthly mortgage payments in August 2023 and August 2022. A monthly mortgage payment is considered affordable if the homebuyer spends no more than 30% of their income on housing. 

Monthly median mortgage payments are calculated assuming the buyer made a 20% down payment, and take that month’s median sale price and average mortgage-interest rate into account. The average mortgage rate in August 2023 was 7.07%, while the average rate in August 2022 was 5.22%. The national income data in this analysis is adjusted for inflation using the Consumer Price Index. 

The typical mortgage payments noted in this report include principal, interest, taxes and insurance. In this report, the word “homebuyer” is used to refer to someone who is taking out a loan to finance their purchase. 

Editor’s note: This report has been updated to clarify that the metro-level year-over-year increases in the income necessary to afford a home is not adjusted for inflation.

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