Homebuying just got tougher for many Americans: after five straight months of declining affordability, June’s numbers show buyers need substantially more income to qualify for a mortgage than they did at the start of the year. The shift matters now because higher borrowing costs and still-elevated prices are squeezing household budgets even as new housing legislation promises long-term fixes.
According to the National Association of Realtors (NAR), the income required to buy a typical single-family home rose again in June, driven by a combination of price levels and interest rates. That makes the gap between what many households earn and what lenders expect even wider heading into the fall buying season.
Key numbers at a glance
| Metric | June (latest) | January | June 2025 |
|---|---|---|---|
| Median single-family price | $446,400 | $398,200 | — |
| Average 30-year fixed rate | 6.57% | 6.19% | 6.9% |
| Income needed to qualify (20% down) | $109,152 | $93,552 | $110,928 |
| Median existing home (any type) | $440,600 (all-time high) | — | — |
Those figures assume a conventional mortgage with a 20% down payment. NAR’s analysis shows affordability has worsened since January, when lower rates and prices meant a much smaller income threshold for buyers. Still, the association notes June’s affordability was marginally better than a year earlier because wage growth slightly outpaced price gains and mortgage rates were lower than in June 2025.
Mortgage rates briefly dipped below 6% in late February, but geopolitical tensions in the Middle East and renewed inflation concerns drove yields — and borrowing costs — back up, analysts say. At the same time, the Bureau of Labor Statistics reports annual consumer price inflation near 3.5%, roughly matching wage growth, which reduces real purchasing power.
What this means for buyers now
Higher borrowing costs push monthly payments up even when prices rise only moderately. For many prospective buyers, that translates into needing a higher qualifying income or larger down payment—barriers that disproportionately affect first-time and moderate-income purchasers.
- Negotiating leverage: Market activity typically eases after midsummer, which could give buyers more room to negotiate and modestly improve affordability.
- Regional differences: The Midwest and South remain the most affordable parts of the country, while the Northeast and West are pricier.
- Short-term outlook: If rates retreat toward levels seen earlier this year, affordability may tick up on a year-over-year basis; anything beyond that depends on inflation and wage momentum.
“In many markets, price gains have moderated enough to allow incomes to catch up gradually,” said Mischa Fisher, chief economist at Zillow, noting that slower appreciation gives buyers a better chance to bridge the affordability gap. NAR economist Lawrence Yun expects some easing once the busy spring-summer period ends, but he warns improvements will be modest unless rates fall further.
Despite slowing price growth — June’s median existing-home price rose only about 1.8% year over year — long-term supply constraints keep pressure on the market. Realtor.com estimates a deficit of more than four million homes, a shortfall that new policy won’t solve overnight.
Policy changes and the housing supply
On July 11, Congress enacted the bipartisan 21st Century ROAD to Housing Act, a package meant to speed up construction, expand financing options, and limit some large investors’ ability to buy single-family homes at scale. Lawmakers say the measures aim to increase supply and ease affordability over time.
But economists caution that building millions of homes takes years. Even with incentives to boost construction and financing, local zoning, labor availability and materials costs will influence how quickly new inventory comes online.
The immediate takeaway for buyers: mortgage costs and price momentum still matter most. Those who can wait may benefit if rates fall or if local inventories rise. For others, tighter credit or higher income requirements will remain a practical obstacle to homeownership this year.
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Jordan Keller specializes in analyzing the US financial markets. With concrete recommendations, he helps you secure and boost your investments by providing strategies that adapt to market fluctuations.