Homebuyers Given Slight Bit of Price Relief

Those looking to purchase a home can feel a slight bit of relief, according to Redfin, which report that homebuyers need to earn less to afford a “typical” US home than in recent months.

In October, Redfin said buyers needed to earn a record $121,000—51% more than the median household income. As of February, they need only $114,000 — still 35% more than the typical household makes.

The median household income is $84,072.

US house prices declined by 0.1 percent in January, marking the first decrease since August 2022, according to the Federal Housing Finance Agency’s Division of Research and Statistics’ seasonally adjusted monthly House Price Index (HPI).

“For over a decade, America has been slowly marching toward a housing affordability crisis due to chronic underbuilding, and that crisis was kicked into overdrive when the pandemic homebuying boom fueled a meteoric rise in housing prices,” Redfin Senior Economist Elijah de la Campa said in prepared remarks.

“Now there’s another culprit squeezing homebuyers: elevated mortgage rates. We’re slowly climbing our way out of an affordability hole, but we have a long way to go. Rates have come down from their peak and are expected to fall again by the end of the year, which should make homebuying a little more affordable and incentivize buyers to come off the sidelines.”

Cost-conscious buyers can look to Texas, which has been building more homes than any other state, putting downward pressure on prices because it means homebuyers have more options to choose from, according to Redfin’s report.

In San Antonio, homebuyers needed to earn 1% more than a year earlier to afford the typical home—the smallest increase among the metros analyzed. The median home sale price in San Antonio fell 4% year over year in February, making it the only major metro that posted a decline.

Next came Detroit (3%), Austin (4%), Fort Worth (5%) and San Francisco (6%). Prices in Fort Worth and Austin were up by less than 1%, making them some of the smallest gainers in the nation.

Housing supply in Fort Worth jumped 14% year over year in February, one of the biggest increases in the U.S. In Austin, the housing market has cooled because an influx of out-of-towners in recent years drove housing costs to unsustainable heights, leaving many buyers priced out.

Opposite when it comes to the math is Anaheim, Calif., where homebuyers in February needed to earn 20% more than a year earlier to afford the typical home—the biggest jump in the nation.

Next came West Palm Beach (18%), Fort Lauderdale (18%), New Brunswick, NJ, (18%), and San Diego (17%).

FHFA added that year-over-year house price growth remained near the historical average.

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