Housing affordability and supply have been ongoing challenges for many Americans as they look to buy homes.
A newly released report from the National Association of Realtors (NAR) and Realtor.com found that nationwide inventory has gone up compared to last year as of March, but “access to affordable homes remains out of reach for many buyers.”
Among the income levels that the report looked at, middle-income buyers with $75,000 in annual pay saw the biggest year-over-year increase in the share of homes listed on the market that they are financially able to purchase, with it going from 20.8% in March 2024 to 21.2% this year.
At the same time, that remains 27.6 percentage points lower than the share in pre-pandemic 2019 and 26.9 percentage points short of what they should be capable of buying in a balanced market, according to the NAR and Realtor.com’s “Housing Affordability & Supply” report.
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Middle-income buyers have an “affordability gap” of more than 415,900 homes priced below $254,780, the report said.
“This income group, middle-income buyers, face the largest shortage of affordable listings,” NAR Senior Economist and Director of Real Estate Research Nadia Evangelou told FOX Business in an interview. “So middle-income buyers gained the most, and that’s very encouraging, yet still have the furthest to go, so there is this middle-income paradox, like biggest gains and biggest gaps.”
Upper-middle-income buyers also saw the share of homes up for sale that they can afford go up from March 2024 — rising 0.2 percentage points to hit 37.1% — but like middle-income earners, there is still a big deficit of affordable homes for them.
According to the report, a balanced market should have 742,870 homes with prices manageable for them, meaning nearly 363,700 homes sporting price tags of $339,700 or lower are necessary.
As for low-income buyers, Evangelou said there has been “no improvement” in the share of listings on the market that income group can afford.
Households with annual incomes of $50,000, $35,000, $25,000 and less than $15,000 all contended with the share of listings they can bear the expense of shrinking between March 2024 and March of this year, the report showed.
For example, the proportion of up-for-sale homes accessible to homebuyers who make $50,000 decreased 0.7 percentage points year-over-year, hitting just 8.7%.
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The report said $50,000 income earners “should be able to afford to buy one-in-three listings if the market were in balance.”
Evangelou said that while national inventory posted a 20% increase from March last year, the country is “still far away from where we need to be.”
She said more homes need to come on the market.
Evangelou noted there has been an “interesting shift” in home builders constructing smaller homes, something that she said was a “development in the right direction” and that can “help having more choices at price points” that income groups like middle-income buyers can afford.
“More homes alone won’t fix the affordability crisis, not unless they are priced right, so we need to better match between what’s being built and what people can afford,” she told FOX Business. “That means also rethinking local zoning, incentivizing smaller and more modest homes, supporting builders and expanding access to financing tools like down payment assistance.”
The NAR and Realtor.com “2025 Housing Affordability & Supply” report also looked at how the largest metropolitan areas and states have been doing in terms of housing affordability and supply.
Of the 100 metro areas examined, the report found 30% were “areas getting closer to balance” for affordable home supply across income levels, while 44% saw “areas stuck in the middle” with “misaligned but not at crisis level” housing supply and demand, according to NAR. The other 26% of the metros saw housing affordability weaken.
Iowa, Ohio, Indiana, Illinois and West Virginia stood out as the five states home to housing markets “closest” to balanced, while Montana, Idaho, California, Massachusetts and Hawaii were found to be those with the “largest shortfall of affordable listings.”
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“If we want a housing market that works for everyone, not just the top earners, we need to be intentional about what we build, where we build it, and who we are building it for,” Evangelou said, noting the needs can be “totally different” depending on the location.
In January, a separate survey released by Realtor.com found many U.S. adults – 75% – still consider homeownership to be a component of the American Dream.
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