According to the latest data from the Atlanta Federal Reserve, American households need an annual income of $124,674 to afford a home priced at the national median level, which is 44% higher than the current median household income in the U.S.

The Atlanta Fed's "Housing Affordability Monitor" (hoam) tool calculates the income threshold required to afford a median-priced home based on the U.S. Department of Housing and Urban Development (HUD) standard that "monthly payments should not exceed 30% of household annual income," incorporating costs such as mortgage principal and interest, property taxes, homeowners insurance, and private mortgage insurance (PMI). Data sources include the U.S. Census Bureau (household income), Zonda Home (median home prices, three-month moving average), and Freddie Mac (mortgage rates).

The latest report from the U.S. Census Bureau, released on September 16, shows that the median household income in the U.S. is projected to reach $87,460 in 2025, the highest since this statistic began in 1967, reflecting a 2.6% increase from $85,210 in 2024; the after-tax median household income is $76,060, up 3.1% year-on-year. Based on this calculation, the $124,674 income threshold for home purchases is approximately 42.6 percentage points higher than the actual median income, which closely aligns with the reported 44% figure (the discrepancy may stem from the monthly updated income benchmarks used by the Atlanta Fed compared to the annual reporting standards of the Census Bureau).

Data from the National Association of Realtors (NAR) indicates that the median price of existing homes sold in the U.S. was $440,600 in June this year, a year-on-year increase of 1.8%, marking 36 consecutive months of year-on-year increases; Freddie Mac's latest data shows that the average rate for a 30-year fixed mortgage rose to 6.95% in the week of September 18, an increase of about 69 basis points from the same period last year. The continuous rise in home prices, combined with the rebound in mortgage rates, has collectively pushed up the income threshold required to afford a median-priced home.

The Census Bureau's report also indicates that income inequality in the U.S. continues to widen: between 1967 and 2025, the actual income of the 90th percentile group has increased by about 121%, while the 10th percentile group has only seen an increase of about 56%, with the 90/10 income ratio expanding from 9.23 in 1967 to 13.06 in 2025; from 2024 to 2025, the highest income group has continued to see income growth for the third consecutive year, while the income of the lowest 10% has shown no statistically significant change year-on-year.

Notably, another measure of housing affordability, the NAR's "Housing Affordability Index," presents a contrasting conclusion: NAR's chief economist Lawrence Yun stated that "due to wage growth outpacing home price increases, current affordability is better than the same time last year," with improvements seen in the West, South, Midwest, and Northeast regions (improvements of 8.9%, 8.3%, 6.2%, and 4.5%, respectively). The inconsistency between the two indicators reflects differences in statistical methodologies—the NAR's index reflects more of the "year-on-year change direction," while the Atlanta Fed's hoam calculation measures the "absolute gap between current income thresholds and actual median income," which is more directly impacted by the rise in mortgage rates since September (from 6.49% in June to 6.95% in September), indicating that despite a "marginal improvement" year-on-year, the absolute gap in housing affordability remains at a historical high.

This round of mortgage rate increases is directly related to the recent rise in long-term U.S. Treasury yields—by mid-September, the yield on 10-year U.S. Treasuries briefly surpassed 5%, while the 30-year yield previously reached a 19-year high of 5.34%. The rise in long-term rates directly translates into higher actual financing costs for homebuyers through mortgage pricing mechanisms.

Source: Public Information