Homebuyer affordability in the United States deteriorated for the fifth straight month in June, according to the National Association of Realtors' latest housing affordability index, underscoring persistent headwinds for residential buyers despite slower price appreciation. The income required to qualify for a mortgage on a median-priced single-family home of $446,400 reached $109,152 last month, assuming a 20% down payment and based on an average 30-year fixed-rate mortgage of 6.57%. The erosion in affordability has been steady since January, when the median home price stood at $398,200, the average rate was 6.19%, and qualifying income was $93,552.
The June figures, however, represent a modest improvement from the same month a year earlier, when mortgage rates were higher at 6.9% and qualifying income stood at $110,928. Lawrence Yun, chief economist for NAR, noted that affordability last month was actually slightly better compared with June 2025, as income growth outpaced home price appreciation and mortgage rates were modestly lower. The year-over-year comparison offers a counterpoint to the monthly deterioration trend that has characterised the first half of 2026.
Mortgage rates, which had dipped below 6% in late February, reversed course as geopolitical pressures took hold. The onset of the Iran war and the accompanying spectre of inflation pushed rates higher, according to industry experts. The shift in rate trajectory has been a primary driver of the affordability squeeze through spring and early summer, compounding seasonal price pressures that typically emerge as buying activity increases from winter through mid-summer.
Inflation data released by the Bureau of Labor Statistics showed an annual increase of 3.5% based on the consumer price index, a figure that matches the current annual growth in average hourly wages. That parity means workers' pay increases are effectively being consumed by inflation, leaving little room for households to absorb higher housing costs. The wage-price dynamic adds another layer of complexity to the affordability challenge facing prospective buyers across US markets.
The median price of an existing home of any type reached an all-time high of $440,600 in June, representing a 49.2% increase from June 2020, according to NAR data. Despite the record peak, the pace of price increases has decelerated markedly. June's median was just 1.8% higher than a year earlier, a sharp contrast to the double-digit annual increases recorded during the pandemic housing boom. The moderation in price growth suggests the market is stabilising, though absolute price levels remain elevated by historical standards.
Regional disparities in affordability remain pronounced, with the Midwest and South generally offering more accessible price points than the Northeast and West, according to the NAR index. Mischa Fisher, chief economist for Zillow, observed in a recent blog post that buyers in most markets will find prices still climbing, but at a pace that leaves more room for incomes to catch up than in prior years. The divergence across geographies means affordability conditions vary considerably depending on location and local market dynamics.
Looking ahead, Yun said he expects slight improvements in affordability as the market moves beyond the busy spring and summer buying season, giving buyers more negotiating power. On a year-over-year basis, affordability could improve further if mortgage rates ease back toward the levels seen at the beginning of the year, before the Persian Gulf conflict, he added. The outlook hinges on both rate movements and the typical seasonal softening in prices that occurs in autumn and winter months.
Legislative efforts to address the housing supply shortage took a significant step forward with the bipartisan 21st Century ROAD to Housing Act, which became law on 11 July. The legislation combines dozens of measures aimed at encouraging home construction, expanding access to financing, and restricting purchases by large institutional investors. However, experts caution that homebuyers may not see benefits for some time, given a shortage of more than 4 million homes according to Realtor.com. Many economists believe reversing that deficit will require sustained policy implementation over multiple years before meaningful relief materialises for prospective buyers.