Housing affordability took a turn in 2024

Article originally posted on Phoenix Business Journal on January 8, 2025

Housing affordability improved slightly in 2024, but purchasing and owning a home was still financially out of reach for the typical U.S. household.

Affordability improved because wage growth remained strong, at 4%, while the increase of housing-related costs slowed, thanks in part to a slight annual decline in mortgage rates and uptick in inventory. ‘Still, a household earning the median U.S. wage of $83,782 would have had to spend 41.8% of their income on monthly costs to afford the typical home nationally in 2024, according to a recent analysis by Redfin Corp. (Nasdaq: RDFN).

That’s significantly higher than the widely accepted threshold of a household not spending more than 30% of its income on housing costs. It was an improvement from 2023, in which the typical U.S. household had to spend 42.2% of their income on monthly costs of a median-priced home — a record share, according to Redfin.

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