Americans Had To Spend 41.8% of Their Income To Afford a Typical Home in 2024, Study Finds

Plenty of hopeful homebuyers retreated from the housing market last year due to soaring prices and elevated mortgage rates, making it one of the least affordable homebuying years in the US.

The housing market was so unaffordable last year that homebuyers making a median income of $83,782 would have had to spend 41.8% of their earnings to afford the monthly costs of homeownership for a $429,734 median-priced home. That means, according to a recent report from Redfin, homebuyers would have had to pay $35,020 in housing costs last year.

The figures are based on the assumption that the homebuyer has secured a monthly mortgage rate of 6.72% and has put a 15% down payment.

Real estate experts say a home is affordable if it does not require buyers to spend more than 30% of their income on housing costs. Households spending more than that are considered cost-burdened.

How Did It Compare To Housing Affordability in Prior Years?

Last year's income threshold was a slight improvement from 2023 when households earning the median income needed to spend 42.2% of their income to afford typical monthly housing costs. That said, it is the second most unaffordable homebuying year since 2012, the report noted.

It is important to note that housing affordability has continuously worsened since 2020. During the pandemic, median-wage earners had to spend 28.7% of their income to afford monthly housing costs. This increased to 31.4% in 2021 and soared to 39.0% in 2022.

How Much Did Buyers Need To Earn To Afford a Home?

To afford a typical median-priced home in 2024, buyers would have had to earn at least $116,782. Thus, they would spend no more than 30% of their earnings on monthly housing payments, which is a whopping $33,000 more than the average wage.

For perspective, the median monthly housing payment last year was $2,920, up 4.3 percent from 2023 and 86 percent from 2019.

Also, the income threshold only accounts for median-priced homes. Some states have higher home values. In Anaheim, for example, households making a median wage of $121,925 would have needed to spend 75.9% of their wsalarieson monthly housing costs if they bought a median-priced home of $1,165,965.