Mausam Bhatt Chief Product and Technology Officer | realtors.com
The financial landscape for prospective homeowners in the United States appears challenging, according to a recent analysis by Realtor.com. The study indicates that the minimum recommended income to purchase a median-priced home significantly exceeds the median household income across many states.
Realtor.com senior economic research analyst Hannah Jones remarked, "Purchasing a median-priced home in today’s market ranges from challenging to downright impossible for median-income households." This gap is particularly pronounced in certain states where the difference between necessary income and actual household earnings stretches into six figures.
Illinois stands out as relatively affordable, with the required income being only about 7% higher than its median household income of $80,306. However, this still implies that households might spend more than the recommended 30% of their income on housing costs.
Conversely, Montana presents a stark contrast. In December 2024, the state's median list price was $604,500, necessitating an income of $178,017—more than double its median household income of approximately $70,800. "That means the average household in Montana had to be bringing in more than 151% of the state’s median annual income to afford a typical home," noted Jones.
On a national scale, acquiring a home priced at the U.S. median of $402,500 requires an annual income of $118,530. This figure surpasses the national median household income by over 52%.
In terms of affordability extremes within states, Hawaii demands the highest incomes due to its steep real estate prices. To purchase a typical home listed at $800,000 there requires an annual earning of $235,588. West Virginia offers a contrasting scenario with its lower property prices; however, even there, buyers need to earn more than 30% above the state's median income to afford homes priced at $249,000.
Realtor.com's findings are based on analyzing monthly mortgage payments using data from December 2024 and assume conditions such as a 10% down payment and mortgage rates around 6.93%.
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