Quarterly Analysis: Income Required to Buy a Home

In the second quarter of 2025, nearly level mortgage rates and seasonally-rising home prices saw the income needed to purchase a median-priced home increase in 46 of the nation's largest metropolitan housing markets. Four markets did see improvement in affordability; this was the largest second-quarter number in at least the last nine years.

August 18, 2025 - HSH.com, a trusted online resource for mortgage data, content and expertise updated its analysis of the income required to afford a median-priced home in the top 50 metropolitan areas for the second quarter of 2025. The review utilizes the latest quarterly existing home price data from the National Association of Realtors (NAR), incorporates local property tax and homeowner’s insurance costs, and calculates the income needed to buy a median-priced home in each market.

Compared to one year ago, the second quarter of 2025 saw improved relative home affordability in 40% of the nation's 50 most populated metropolitan areas, as mortgage rates declined compared to the second quarter of 2024. However, mortgage rates in the second quarter of 2025 were nearly unchanged compared to the first quarter, and with seasonal home prices on their annual upswing, 46 of 50 metros saw a reduced in affordability compared to the first stanza of 2025.

Home prices typically reach their annual peaks during the second quarter of each year, and largely did so again this year, but this was not true everywhere. One metro are was unchanged compared the first quarter, and four metros posted median price declines for the period. It is unusual to see any median home -price declines during the second quarter of a year, and the four markets that did see reductions was the largest number of declines for the period in at least nine years. The only prior second quarter with even one metro price decline was in pandemic-distorted 2020.

Fourteen metro areas posted lower median home prices in the second quarter of 2025 than in the same period for 2024.

Compared to the first quarter of 2025, mortgage rates were essentially flat, managing only a four basis point decline (0.04%), so there was no affordability improvement from lower financing costs. That said, the current 6.79% quarterly average rate for a conforming 30-year fixed-rate mortgage was a more meaningful 21 basis points below the same period a year ago, improving affordability a bit this year relative to last.

In the current "national" calculation, buying a $429,400 median-priced home with a 20% down payment ($343,520 loan amount) using a 30-year mortgage with a rate of 6.79% requires an annual income of $114,169.11 to qualify once typical tax and insurance costs are included.

This is only $149.7 higher than in the second quarter of last year, although $5,728.31 more compared to the first quarter. While affordability declined in both instances, the diminishment is of little consequence overall, as the estimated national median family income still falls well short of this level. As such, affordability remains out of balance.

The most and least affordable metro areas in the income-required analysis (assuming a 20% down payment):

Salary calculations using a 10% downpayment and including PMI are also provided for each of the 50 metro areas.

Some takeaways from the updated analysis:

• The second quarter of 2025 saw a decrease in home affordability across a majority of markets compared to the first quarter of 2025. Forty-three of the top 50 metro housing markets saw homebuyers need more income to buy a median-priced home. However, year-ago comparisons were more favorable, as mortgage rates were lower. Twenty of 50 metros saw lower incomes needed to purchase a median-priced home in the second quarter of this year compared to the same period in 2024.

• Home prices were up in 46 of the top 50 housing markets and were unchanged in one. Home prices often reach their seasonal peaks during the second quarter of each year. Four metros showed a decline in price compared to the first quarter; this is the greatest amount in at least nine years, and only one other second quarter over that time had even one market posting a decline.

• The incomes required to buy a home was higher in 43 markets during the period. Just seven metro areas saw homebuyers need less income to purchase a median-priced home compared to the first quarter of 2025. Referenced against a year-ago time frame, the income needed to buy a median-priced existing home was higher in only 30 of the top 50 markets, ranging from an increase of just 0.02% in the Riverside/San Bernardino metro are to as much as 4.39% in the Cleveland, OH metro area. In markets the income needed to purchase a median-price declined, the reduction was as little as 0.13% in the Nashville, TN metro but as much as 4.15% in the Tampa, FL region.

• Mortgage rates were little changed in the second quarter. In the second quarter of 2025, the average 30-year fixed-rate mortgage used in HSH's calculation was four basis points (0.04%) lower than in the first quarter, averaging 6.79% for the three months ended June.

• Generally higher home prices meant a greater need for borrowers to save. Home prices at seasonal peaks saw borrowers need to save up even more to hit a desired level of down payment. A 20% down payment on a nationally median-priced home of $429,400 requires $85,880 in cash, and a potential buyer will still need thousands of dollars more for closing costs and any required reserves. Since HSH's calculations work from a given home price, a borrower who puts only 10% down ($42,940) will face both a larger mortgage amount and costs for Private Mortgage Insurance -- lifting the income needed to buy the home by $17,229.85

• Supplies of homes to buy continue to improve. At the average rate of sale during the period, the National Association of Realtors estimated that there were about 4.56 months of supply of homes available in the second quarter of 2025, well above 2Q24's 3.76 months of supply. For the April-June period, inventory-to-sales ratios were 4.7 months, 4.6 months and 4.4 months -- the thickest that second quarter inventories have been since way back in 2016.

These items and other observations are discussed in greater detail in the “Latest Analysis” component of the report.

Potential homebuyers are encouraged to see how much home they can afford to buy using HSH's Home Affordability Calculator.

With affordability still waning, potential homebuyers of more modest means looking to buy homes may struggle to come up with a down payment and closing costs, particularly in heated markets. Help making the jump to homeownership is often available but is tricky to find if you don't know where to look. To help potential homebuyers, HSH offers its database of Homebuyer Assistance Programs by state, where information about these valuable programs, vital website addresses, contact info and more can be found.

Find the lists here for the 25 most expensive and 25 least expensive metropolitan areas with display maps for each list.

Since 1979, HSH.com has been a trusted mortgage resource for consumers seeking independent, objective and expert-level information, forecasts and data. HSH.com offers unique analysis, calculators, tools and content to help demystify first mortgages, home equity loans and lines of credit, reverse mortgages and more. HSH.com empowers homebuyers and homeowners to fully understand their home financing choices and provide opportunities for them to engage with partners to execute their transactions. Keith Gumbinger, mortgage expert and vice president of HSH.com, is available for interviews at your request.