Home affordability weakens again as mortgage costs squeeze buyers

Buying a home became harder in June for the fifth month in a row, according to the National Association of Realtors. For households watching mortgage rates on their phones, the math is still demanding: higher borrowing costs and elevated prices mean more income is needed to qualify for a loan.

NAR’s housing affordability index showed that a buyer needed annual income of $109,152 to qualify for a mortgage on a median-priced single-family home in June. The group said that calculation was based on a $446,400 median single-family home price, a 6.57% average rate on a 30-year fixed mortgage and a 20% down payment.

A housing affordability index measures whether a typical household earns enough to buy a typical home under current prices and mortgage rates. A mortgage rate is the interest rate charged on a home loan, and even small changes can move the monthly payment because the loan is paid over many years.

Affordability has worsened since January

NAR’s index has weakened every month since January. At the start of the year, the median home price was $398,200, the average 30-year fixed mortgage rate was 6.19% and the income needed to qualify was $93,552, according to the association.

The picture looks slightly better when compared with last year. Lawrence Yun, NAR’s chief economist, said June affordability improved from June 2025 because income growth was stronger than home price growth and mortgage rates were a bit lower. In June 2025, NAR said the mortgage rate was 6.9% and buyers needed $110,928 in income to qualify.

That year-over-year improvement does not erase the pressure facing current buyers. The median price for an existing home of any type reached a record $440,600 in June, according to NAR. That was 49.2% above the June 2020 level.

Price increases have cooled, though. NAR said the June median price was up 1.8% from a year earlier, far below the double-digit annual gains recorded during the pandemic housing boom.

Rates, wages and seasonality are doing the work

Mortgage rates had fallen below 6% in late February, before moving higher as inflation concerns rose around the Persian Gulf conflict. Yun said affordability could improve on a year-over-year basis if mortgage rates move back toward the levels seen earlier in the year, before that conflict.

The latest consumer price index showed a 3.5% annual rise in inflation, according to the Bureau of Labor Statistics. Average hourly wages also grew 3.5% annually, BLS data showed, which means pay gains have broadly matched price increases rather than giving workers extra buying power.

Seasonality also matters. Yun said home prices typically climb from winter into midsummer as buyer activity picks up.

Yun said NAR expects affordability to improve slightly after the spring and summer buying season, when buyers may have more room to negotiate.

Regional gaps and housing supply remain key

Affordability varies widely by region, according to NAR. The association said the Midwest and South are generally more affordable than the Northeast and West.

Mischa Fisher, chief economist at Zillow, said in a recent blog post that buyers in most markets are still seeing home prices rise, though at a pace that gives incomes more room to catch up than in prior years.

Policy is also entering the picture. The bipartisan 21st Century ROAD to Housing Act became law on July 11 and is designed to increase housing supply and address affordability, according to the measure’s description. It includes provisions aimed at encouraging construction, widening access to financing and limiting purchases by large institutional investors.

Homebuyers may not feel the effects quickly. Realtor.com estimates the U.S. housing shortage at more than 4 million homes, and many economists say closing that gap will take time.

This story draws on original reporting from CNBC.