Middle-Income Homebuyers Are Facing the Biggest Shortfall of Affordable Homes

The supply of homes for sale in the U.S. is rising quickly, but a new report shows that millions of middle-class homebuyers still face a significant shortage of homes in their price range.

Middle-income homebuyers making $75,000 could afford just 21% of the available listings nationwide in March, compared with 49% in 2019, according to the joint report on housing affordability and supply from Realtor.com® and the National Association of Realtors®.

Families in that income bracket should be able to afford at least 48% of the homes for sale in a balanced market, because they earn close to the median income. Closing the current gap would require a staggering 416,000 additional homes priced below $260,000 to hit the market, the report found.

Out of the 100 largest metro areas in the country, only two have enough homes on the market at that price level to meet demand from buyers earning $75,000: Akron and Youngstown, OH.

The widespread shortage of affordable middle-class homes persists despite a 20% national increase in the supply of for-sale inventory in March compared with a year earlier.

“Shoppers see more homes for sale today than one year ago, and encouragingly, many of these homes have been added at moderate income price points,” says Realtor.com Chief Economist Danielle Hale. “But as this report shows, we still don’t have an abundance of homes that are affordable to low- and moderate-income households, and the progress that we’ve seen is not happening everywhere.”

Meanwhile, households that earn $100,000 annually aren’t in a much better position.

They can currently afford 37% of home listings, up slightly from a year ago—but far below the 65% they could afford in 2019 and well below the 61% target for market balance.

The market would need an additional 364,000 home listings priced below $340,000 to meet demand from buyers in this income group.

Households earning $50,000 annually should be able to afford a third of available listings in a balanced market, but the report shows they can afford only 8.7% of home listings today, down from 9.4% one year
ago.

To achieve balance, about 367,000 listings at a maximum price of $170,000 would need to hit the market.

“For many first-time home buyers, navigating the current housing market still feels like window shopping,” says NAR senior economist Nadia Evangelou. “Listing prices don’t match first-time home buyers’ budgets. If the promising trend of building smaller homes continues, that could be a meaningful step toward easing the housing affordability gap for more buyers.”

States making gains in affordability

From a state perspective, Iowa, Ohio, Indiana, Illinois, and West Virginia lead the nation in offering balanced housing market conditions.

In most of these states, a household earning $75,000—near the national median—can afford at least 45% of the for-sale home listings.

As well, Delaware, Utah, Colorado, Florida, and Arizona showed the most improvement with significant year-over-year gains in housing affordability.

Among the states with the largest deficits of affordable homes are Montana, Idaho, California, Massachusetts, and Hawaii, although those states are making gains with additional inventory.

Only the District of Columbia improved affordability compared with pre-pandemic levels.