Deep into an affordability crunch, as one of the primary barriers to homeownership remains soaring costs, the urgent question is no longer where we are or how we got here, but where we are headed.
A new study conducted jointly by Realtor.com® and the National Association of REALTORS® (NAR) seeks to answer this question by separating metros into three categories—those that are improving affordability, those that are stuck, and those that are falling even further behind.
With a solid 30% of the 100 largest metros in the country categorized as “getting closer to balance,” compared to 26% that are “falling further behind,” the trajectory for housing is still decidedly mixed, with multiple years of historically low transactions and no immediate sign of a swift turnaround.
Almost half (44%) of metros are “stuck in the middle” according to the analysis, as some make progress but still face a long and uncertain road to a healthy market, where housing opportunities are proportional to income levels.
According to Nadia Evangelou, senior economist and director of real estate research for NAR, the data paints an overall complex picture, without an easy or simple solution.
“What we take away from all of this is that more homes are coming on the market and that’s good, but more homes alone won’t fix the affordability crisis,” she says. “Not unless they are priced right. So we need a better match between what is being built and what people can afford.”
The report, co-authored by Evangelou, is careful to say that new inventory “is very good news,” with a few states—Texas, Florida and Tennessee, for example—actually surpassing pre-pandemic inventory levels. Evangelou adds that looking at the data, the country is “no longer in crisis mode.”
But at a national level, a full recovery to where middle-income families can afford homes is still far off. For instance, in March of 2019, a family making $75,000 a year could afford 48.8% of listings, very close to what the study defines as “balanced.”
In March 2024, families at that income could only afford 20.8% of listings, that analysis found. That has since ticked up ever so slightly, to 21.2%.
For buyers at slightly higher incomes, the story is the same. At $125,000, families were able to afford 74.8% of listings in 2019, falling to 51.7% in 2024, and remaining at that same level today.
Evangelou says there is little chance that the middle-income group will recover their purchasing power as fast as they lost it.
“The next five years I expect to see more progress,” she says. “I don’t expect, in the next two or three years, to have what we had in 2019.”
According to Evangelou, a “healthy market” still needs around 420,000 more listings priced at or below $255,000.
At lower incomes ($50,000 and below) the news is even worse, with no sign of a recovery as the number of homes those families can afford continues to decrease—from 9.4% last year to 8.7% this year. Those families should be able to afford about 33% of homes, as they make up 33% of the population, the report says.
“Without a significant boost in housing inventory at price points below $260,000, the path to homeownership will remain blocked for millions of Americans who are otherwise financially ready to buy,” the report said.
“Meaningful” progress
The metros that are on the right track—maybe unsurprisingly—are those that were more affordable to start with. Evangelou says that cities like Raleigh, North Carolina, and Des Moines, Iowa, are starting from a more “balanced” place, and continuing to build homes at multiple price points.
That further underscores how hard it is to dig out of the affordability hole. Evangelou singles out San Antonio, Texas, which added the most listings affordable to the key $75,000 income bracket out of every large metro covered by the study.
But San Antonio is part of the group considered “stuck,” simply because its deficit of affordable homes is so large—still needing 5,681 new listings at that price point to become “balanced.”
“Even with these gains, these metros in the second group still aren’t really affordable,” she says. “So I will say that these middle-tier markets are at the crossroads. They can either turn toward balance or remain where they are right now.”
Metros that are falling further behind are mostly big coastal cities—including Boston, Massachusetts; Philadelphia, Pennsylvania’ and Los Angeles, California. But there are other cities—Boise, Idaho, and Milwaukee, Wisconsin, for example—that are still struggling, despite their location in the generally more affordable Midwest region.
Those struggles go beyond housing, and speak to the struggle of these communities to provide for their populations, Evangelou says.
“So when housing becomes this disconnected from income, it doesn’t align. So we are not just talking about a real estate problem, we are talking about an economic, social and even generational issue,” she says.
At the same time, housing can also be the driving force behind thriving communities. The metros that are on the right track for affordability are generally host to stable labor markets and population growth, which Evangelou says are a result of their housing affordability as much as a catalyst for it.
“We see that the main reasons for someone to move is, first of all, we see housing related reasons, about affordability,” she says.
Sea to shining sea
Zooming out, the report also grouped states into a separate set of categories—those closest to balance, those with the biggest shortfalls of affordable listings, and those that have made the most progress.
The states that have made the biggest progress in adding affordable listings (from last year) include Delaware, Utah, Colorado and Arizona. States that are closest to a balanced market are Iowa, Ohio, Illinois and West Virginia.
Montana, Idaho, California, Massachusetts and Hawaii top the list of biggest deficits.
The report notes that looking at either the state or metro level, most markets are still “stuck in the middle” and have a long way to go for balance. Not a single state is considered “balanced” right now (10 were in 2019), and no state has actually increased its affordability from pre-pandemic levels (although Washington, D.C. did, while still remaining low on the rankings).
Evangelou says the focus for policymakers needs to remain on these affordable builds. While existing homes may naturally see some affordability relief from rates and new inventory as the lock-in effect fades, a sea-change in construction priorities is necessary to return to balance
“That means rethinking local zoning, incentivizing smaller and more modest homes, supporting builders and expanding access to financing tools like down payment assistance,” she says.
