Home Affordability Worsens as Majority of US Metro Areas Exceed 30% Income Rule for Buyers

A growing number of US homebuyers are struggling with affordability as housing costs continue to outpace income growth, according to a new report by Realtor.com.

The study finds that in 47 out of the 50 largest metro areas, purchasing a median-priced home now requires spending more than 30% of a household’s income, a commonly used benchmark for housing affordability.

The 30% rule serves as a general guideline that households should not spend more than 30% of their gross income on housing to maintain financial stability. However, rising mortgage rates, limited inventory, and elevated home prices have made this standard increasingly difficult to follow.

Realtor.com’s analysis—based on a 20% down payment and May’s average mortgage rate of 6.82%, with taxes and insurance included—found that only three metro areas still meet this threshold:

• Pittsburgh, Pennsylvania: Homebuyers spend 27.4% of median household income ($72,935) to afford a $249,900 home.

• Detroit-Warren-Dearborn, Michigan: Households use 29.8% of income ($72,493) for a $270,000 home.

• St. Louis, Missouri: Spending aligns exactly with the 30% benchmark for a median home and income of $79,869.

Elsewhere, the gap is far more pronounced. In Los Angeles-Long Beach-Anaheim, the cost of a median home requires 104% of the median income, while in New York-Newark-Jersey City, it takes 66.9%. Boston-Cambridge-Newton homebuyers must spend 64.3% of their income, the report found.

Realtor.com Chief Economist Danielle Hale noted that affordability is increasingly tied to regional dynamics.

“While a few Midwestern markets still offer a path to homeownership for the median-income household who can make a 20% down payment,” she said, “it remains out of financial reach without significant changes to either housing supply or interest rates in most large markets.”

Nationally, the cost of buying a typical home now demands 44.6% of a median household’s income, the report showed.

A lack of affordable inventory remains one of the central challenges. A separate joint report by the National Association of Realtors and Realtor.com last month found that only 30% of the 100 largest metro areas are close to achieving a balance between home prices and local incomes. Meanwhile, 26% of these markets are seeing affordability gaps continue to grow.

Despite affordability headwinds, demand for homeownership remains strong. A Realtor.com survey conducted in January found that 75% of US adults still view owning a home as a key part of the American dream. As of the first quarter of 2025, the US homeownership rate stood at 65.1%, according to data from the Federal Reserve Bank of St. Louis.

With input from FOX Business.