Housing crisis deepens with just 28% of US homes within reach for buyers

Fewer than 30% of homes on the U.S. housing market are affordable for the average household as borrowing rates remain a critical barrier, according to a Realtor.com report.

As of August, only 28% of homes on the market were priced within reach of the typical household, with the maximum affordable home price for a median-income household falling to $298,000. In 2019, that figure was $325,000, according to the real estate firm’s Buying Power Report. This means buying power is down by nearly $30,000 nationally since 2019, even though the median income rose by 15.7%. 

Higher mortgage rates are largely to blame, according to Realtor.com chief economist Danielle Hale.  

HOME PRICES REACH RECORD HIGH IN JUNE – THESE STATES ARE THE MOST EXPENSIVE

District of Columbia and U.S. flags outside a home in the Capitol Hill neighborhood of Washington, D.C., on Tuesday, Aug. 12, 2025. (Al Drago/Bloomberg via Getty Images / Getty Images)

“Even as incomes grow, higher interest rates have eroded the real-world purchasing power of the typical American household,” Hale said, noting that “this dynamic is forcing many buyers to adjust their expectations, whether that means looking for smaller homes, moving farther out, or delaying the dream of homeownership altogether.”

Home prices and interest rates have risen so significantly that they reduced homebuying to its lowest level since the mid-1990s, according to the annual State of the Nation’s Housing report from the Joint Center for Housing Studies (JCHS) of Harvard University.

To put the rise in borrowing costs into perspective, the 30-year fixed mortgage rate stood at about 2.65% in January 2021.

Today, mortgage rates have hovered near 6.75% through July, which means the monthly mortgage payment on a $320,000 fixed-rate loan is $600 higher than it would have been at 2019’s average rate. This means buyers are spending an additional $7,200 a year out of the average buyer’s pocket. 

Homes in the Capitol Hill neighborhood of Washington, D.C., on Aug. 12, 2025. (Al Drago/Bloomberg via Getty Images / Getty Images)

THESE STATES SEE THE MOST ALL-CASH HOME PURCHASES

Realtor.com estimated that in 2019 a $320,000 loan would cover the entire median home price. Today, it would need to be accompanied by a nearly 28% down payment to buy the typical listing, which is priced at $439,450.

Metros such as Milwaukee, Wisconsin, Houston, Texas, Baltimore, Maryland, New York City, and Kansas City, Missouri, are hurting the most, with all the areas seeing buying power declines of 9–10.5% in what the median earner can afford. 

A “For Sale” sign outside a house in Washington, D.C., on Aug. 12, 2025. (Al Drago/Bloomberg via Getty Images / Getty Images)

Milwaukee experienced the highest buying power percentage with a decrease of 10.5%. The maximum affordable home price fell from $314,000 to $281,000, which translates to a $33,000 drop, according to the Realtor.com data. 

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All the metros still had a relatively high share of affordable homes, besides New York, where just 13.1% of listings in July were within reach of a median-income household, the data showed. 

Conversely, buying power has grown in six of the 50 metros since 2019. Cleveland, Ohio, saw the biggest growth in buying power as wage gains helped boost the affordable home price more than 4% from $249,000 to $260,000. In July, half of Cleveland’s inventory was considered affordable for median-earning households.

Phoenix, Arizona, Tampa, Florida, and Austin, Texas, also saw a slight boost in buying power, in large part because of wage growth. Still, while buying power improved in all six markets, the share of homes affordable to median-income buyers is still lower than it was in 2019 as rapid home price growth has outpaced income gains, according to the report.