Only 28% of Homes on the Market are Affordable for a Typical Household

Core Insights - The August 2025 Buying Power Report from Realtor.com® indicates that only 28.0% of homes on the market are affordable for the typical U.S. household, with the maximum affordable home price dropping to $298,000 from $325,000 in 2019, a decrease of nearly $30,000 [1][9] Economic Context - Despite a 15.7% increase in median incomes since 2019, higher interest rates have significantly reduced the purchasing power of American households, with mortgage rates around 6.75% leading to an additional $7,200 in annual costs for a $320,000 loan compared to 2019 [2][9] - The current typical listing price is $439,450, requiring nearly a 28% down payment for buyers [2] Regional Analysis - Major metropolitan areas such as Milwaukee, Houston, Baltimore, New York City, and Kansas City have experienced the most significant declines in buying power, with Milwaukee seeing a 10.5% drop in affordability [3][4] - In Milwaukee, the maximum affordable home price fell from $314,000 to $281,000, a decrease of $33,000 [3] Affordability Trends - While affordability has declined, some regions still maintain a relatively high share of affordable homes, except for New York City, where only 13.1% of listings were affordable in July [4] - Only six of the 50 largest U.S. metros have seen an increase in buying power since 2019, with Cleveland, Ohio, leading with a 4.4% increase in affordable home prices [6] Buyer Behavior - The decline in buying power is reshaping buyer behavior, leading many to compete for lower-priced homes, turn to rentals, or delay homeownership, particularly among younger households [11] - Sellers may need to adjust pricing expectations or prepare for longer market times due to changing demand dynamics [11] Future Outlook - Restoring lost buying power will likely depend on lower mortgage rates, stronger wage growth, and an increase in housing supply, especially in the affordable segment [11]