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- Housing affordability slightly improved in 2024, with costs dropping to 41.8% of income.
- Despite wage growth, homeownership remains challenging, with an annual household income of $116,782 needed for affordability.
- Los Angeles and San Francisco are least affordable, while Pittsburgh is more affordable.
SALT LAKE CITY — A measure of housing affordability dropped slightly in 2024, the first time that's happened in four years.
The percentage of income that would have to be spent on monthly housing costs for a $429,734 median-priced U.S. home has declined to 41.8% from 42.2% in 2023 for a household earning the $83,782 median U.S. income last year, according to an analysis by Redfin, a Seattle-based real estate company.
What was the second-least affordable homebuying year on record may have been "a slight improvement" over 2023, but housing costs as a percentage of income were described in a news release Monday as "considerably less affordable than the typical share of 30% or lower recorded throughout the 2010s."
Financial experts advise that housing costs should be limited to no more than 30% of earnings, but rising real estate prices have made that tough. Redfin reported that in 2024, a U.S. homebuyer would have have had to make a record high income of $116,782 annually to stay at that 30% mark for housing payments on a median-priced home, $33,000 more than typical household earns.
A Redfin economist attributed the change in the numbers over the past year to higher earnings.
"Affordability improved ever so slightly this year because wage growth outpaced the growth in monthly housing payments," said Redfin senior economist Elijah de la Campa. "But that's not to say buying a home became affordable. For many Americans, buying a home remains more out of reach than ever, and that's unlikely to change anytime soon."
He said even with housing "inventory trending upward, we still expect prices to continue rising in 2025 due to a lack of homes for sale — pushing more would-be homebuyers to rent instead." Redfin reported last month the number of homes for sale hit the highest level since 2020 in November on a seasonally adjusted basis, rising 0.5% month over month and 12.1% year over year.
The analysis released Monday used data for 2024 that went through November, but data from past years was for the full 12 months. The estimated monthly housing payments used median home sale prices, mortgage rates averaging 6.72% for 2024 and assumed a 15% down payment, principal, interest, taxes and insurance.
When it comes to the major U.S. housing markets, Los Angeles, San Francisco and Anaheim topped the list with homebuyers earning the median income needing to spending more than 75% of their paychecks for a median priced home. But homes remained "relatively affordable" in the Rust Belt, with median income earners in Pittsburgh needing to spend 25.3% of their wages.
No Utah housing markets were included in the Redfin analysis. An April 2024 analysis by Bankrate found that Utah saw one of the biggest increases since January 2020 in the annual income needed to afford a typical home, a 70.3% jump from $78,599 to $133,886 a year ago. Only Montana posted a higher increase over the same time period, 77.7%.
