As 2025 comes to a close, affordability has stabilized somewhat for many homebuyers, according to the latest National Association of Realtors®’ (NAR) Housing Affordability Index.
NAR’s data saw the qualifying income needed to buy a home decrease slightly to $100,272 in October (based on a 25% qualifying ratio for monthly housing expense to gross monthly income with a 20% down payment). In addition, monthly payments of $2,089, while the payment as a percentage of income ratio at 23.5%, were similar to those of September.
The median-priced existing single-family home was $420,600, slightly higher than September’s $417,600, but significantly lower than June’s $438,600.
Regionally, the West continues its reign as one of the most affordability challenged regions. The median home registered at a whopping $640,700, coupled with a median family income of $114,914 versus a qualifying income of $152,784 needed to buy a home. Mortgage payments sit at $3,183—or 33.2% of buyers’ incomes. The West is at a deep low of 69.3 on the affordability index.
The Northeast also remained an affordability challenged region. The median home registered at $518,000 compared with a median family income of $115,697 versus a qualifying income of $123,504 to purchase a home. Mortgage payments registered at $2,573—26.7% of incomes.
On the other hand, both the South and the Midwest remained relatively affordable.
The South saw a median home price of $369,600, with a median family income of $98,784 versus a qualifying income of $88,128 needed to buy a home. Mortgage payments of $1,836 are 22.3% of incomes. The Midwest saw a median home price of $322,800, with a median family income of $103,436 versus a qualifying income of $76,944. Mortgage payments of $1,603 are only 18.6% of incomes.
At NAR’s Real Estate Forecast Summit, held remotely Dec. 9, Realtor.com® Chief Economist Danielle Hale was upbeat regarding affordability going forward.
“There are a couple of key takeaways from an affordability perspective that we expect to improve in 2026,” she said. “It’s the first time since 2022 that we think the payment share of income is going to fall below 30%, and that’s a line that’s usually used to demarcate affordable versus unaffordable homes. We expect homebuyers are going to fork over a smaller share of their paychecks in order to afford the typical home.
“We also expect that the typical monthly housing payment is going to decline because mortgage rates are going to come down by enough to offset a modest increase in home prices. So there are two really bright spots in affordability. They’re not hugely forward, but it is taking a step in the right direction for buyers in 2026 without necessarily impacting sellers because we still expect home prices to go up.”
