Buying a typical home is still financially out of reach for many Americans, even as incomes rise.
A Realtor.com housing analysis found that median-income households cannot comfortably afford a median-priced home in any U.S. state, even where housing prices are relatively low.
Here's what to know
The typical U.S. household earned $84,780 in 2025, up roughly 3.8% from 2024, according to Census Bureau data analyzed by Realtor.com.
However, that still left households about $31,136 short of the income recommended to purchase September 2026's median-priced home of $419,250.
The analysis defines affordability as limiting housing expenses to 30% of monthly income before taxes. Its calculations assume a mortgage interest rate of 7.32%, a 10% down payment, and annual property taxes and insurance totaling 1.7% of the home's value.
Homeownership became less affordable as higher borrowing costs more than offset improvements elsewhere. According to the Census Bureau data, only 37 states recorded income gains after accounting for inflation.
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"States have moved further from affordability on average, driven by higher mortgage rates," Realtor.com senior economist Hannah Jones explained.
Jones noted that average rates on 30-year fixed mortgages increased by more than one percentage point.
More background
According to the Realtor.com analysis, Iowa again took the top spot for affordability, repeating its previous year's ranking. Its typical household earned $78,483, just $2,287 below the income needed to afford a median-priced home of $284,900.
Montana, however, was at the other end of the spectrum. The state's median household income was $77,099, roughly $99,000 below what the analysis estimated buyers would need to afford a $635,000 home.
California, Idaho, Hawaii, and New York also had particularly large affordability gaps.
Chase Heiland, a Keller Williams Montana Realty real estate broker, told Realtor.com that scarce inventory and sustained demand are pushing Montana's home prices beyond local wages.
Heiland said construction also faces worker shortages, the need to ship materials from other states, and a limited outdoor building season.
Heiland also noted that buyers in the Bozeman area are looking for more space in nearby communities, including Belgrade, Manhattan, and Three Forks.
What can be done?
The Realtor.com article pointed to potential community-level solutions, including permanent affordability trusts and income-restricted rentals intended to keep housing attainable for low- and middle-income families.
Heiland also suggested easing impact fees, permitting requirements, and building regulations where reasonable to help increase the housing supply.
More construction can change the character of Montana towns, Heiland noted. He also cautioned in Realtor.com's reporting that affordability targets based on either 60% or 80% of the local median income still leave some working households unable to afford housing.
Chuck Simmons, a Des Moines-based broker and mortgage originator with Motto Mortgage, credited a state program for first-time homebuyers, steady housing prices, and a strong job market with helping people purchase homes, according to Realtor.com.
Still, he warned, closing costs, insurance, and property taxes continue to put pressure on buyers.
"A 1% drop in rates on a $300,000 loan would lower a payment by around $200 a month on a 30-year loan. Or, for the same payment, a 1% drop in rates would increase a buyer's purchasing power by around 10%. That kind of savings would definitely make a huge difference in affordability," Simmons said.
Where can I learn more?
From Utah to South Florida, the gap between incomes and home prices is putting homeownership out of reach. These stories examine renters priced out of ownership and buyers facing steep monthly payments.
• Utah's rising home prices have locked out 91% of renters from buying.
• South Florida households earning $67,000 face homes priced around $600,000 and may keep renting.
• A buyer approved for $440,000 faced a $3,600 mortgage payment consuming half their pay.
• In California's Orange County, a buyer feared a $4,000 monthly payment would prove unaffordable.
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