First-Time Homeownership Became Less Affordable Across Most of the United States in Recent Years

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Housing accounts for roughly one-third of the average American’s spending, making higher housing costs a potential strain on household budgets. Over the last five years, rapidly rising home prices and higher financing costs have outpaced wage gains in most counties in the United States, making new homeownership less affordable in many regions across the country.

For first-time homeowners, the average share of household income needed to purchase and finance a median-priced home in a given county has risen throughout most of the United States.^_ Map 1 shows the share of income that a household earning the average wage in a particular county would need to own a median-priced home in that county in 2018–19 (Panel A) and in 2024 (Panel B). Counties shaded in blue are considered unaffordable in that average wage earners in these counties spend 33 percent or more of their monthly income on homeownership costs.^_

Map 1: First-time homeownership has become less affordable across much of the United States

From 2018–19 to 2024, the share of income needed to own a median-priced home rose in most U.S. counties, evidenced by the drastic shift from mostly “affordable” counties (white and gray) to “unaffordable” counties (blue and dark blue) during this period. The decline in new home affordability for the average household was most pronounced in the western United States, coastal markets, and parts of the southeast. However, even counties in the central United States—for example, in Missouri, Texas, and Minnesota—experienced declines in affordability.

Housing affordability for first-time homebuyers began to worsen in 2022. Chart 1 shows the share of income required for a first-time homebuyer to own a median-priced home as a distribution of U.S. counties from 2018 to 2024. In 2018, the share of income needed to purchase a new home in the median county was roughly 20 percent, and the median-priced home was considered unaffordable in only 12 percent of counties. By 2024, the share of income needed to purchase a new home rose to 28 percent in the median county, and the median-priced home was considered unaffordable in 37 percent of U.S. counties.

Chart 1: New homeownership is now unaffordable for many U.S. counties

The share of household income needed for a first-time homebuyer to own a home has risen in recent years due to both rising house prices and higher borrowing costs. In late 2020, house prices in most locations accelerated as the pandemic pushed many renters and roommates to seek out more space, thereby increasing the demand for housing (Gamber, Graham, and Yadav 2023). Chart 2 shows that while average household income (green line) rose during this period, higher incomes were not enough to offset higher house prices (blue line) in most counties. In 2022, higher borrowing rates (purple line) began exacerbating affordability issues across the United States, making homes in many counties unaffordable for the average household. Borrowing rates have leveled off, wages have continued to rise steadily, and the pace of house price increases decelerated in 2023 and 2024, but new homeownership remains costly across large portions of the country.

Chart 2: Higher home prices and elevated borrowing costs outpaced wage increases, making home ownership less affordable

Although rising homeownership costs for first-time buyers have been broad-based, they have been greater in metro areas than nonmetro areas. Chart 3 shows that new homeownership has become less affordable across both metro and nonmetro counties. However, the gap in affordability between metro and nonmetro areas has widened since the pandemic. The median share of average household income spent on homes in metro counties grew from 23 percent in 2018–19 to 33 percent in 2024. The same share for nonmetro (rural) counties rose from 19 percent to only 26 percent over the same period. In 2024, nonmetro counties remain relatively more affordable, with roughly two-thirds of nonmetro counties designated as affordable compared with only one-half of metro counties.

Chart 3: Rise in homeownership costs were felt across metro and nonmetro locations

Overall, housing costs remain high for new home buyers, and affordability has worsened over the last five years. Higher house prices and borrowing costs have not been offset by higher wages, causing affordability issues for new homeowners across a majority of the United States. These affordability issues are broad-based across metro and nonmetro counties, but housing costs increased more relative to incomes in metro counties. While new homeownership costs are high, some reprieve may be ahead. Wages have continued to rise steadily and house price gains are slowing. Nonetheless, it may still take time for housing affordability to return to historical norms.