Key insights
- A new analysis by Oxford Economics indicates that US housing affordability is unlikely to recover for several years, projecting a continued decline over the next decade. This is due to persistently high home prices and mortgage rates outpacing income growth. The situation remains a significant headwind for consumer finances, potentially impacting spending on other goods and services and suggesting a prolonged period of weakness in the housing sector.
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An economist has calculated what it would take to make the U.S. housing market affordable. The bad news is that the answer is years, and several small miracles.
That’s the upshot of an analysis published Tuesday by Nancy Vanden Houten, Oxford Economics' U.S. lead economist. Her Housing Affordability Index tracks whether people with typical incomes can afford typical homes. Currently, the answer is a resounding “no.”
Home affordability remains a weak spot in consumer finances despite rising incomes and a soaring stock market.
In order for the market to become “affordable” by 2033, home prices would have to stay flat and mortgage rates would have to be about half a percentage point lower than expected over the intervening years—events that Oxford described as “unusually favorable conditions.”
The new analysis sheds light on the daunting financial obstacles homebuyers face today, given current prices, incomes, and mortgage rates, especially if they don’t already own a home. Oxford’s index uses different data than the widely cited index published by the National Association of Realtors, and paints a far gloomier picture.
As of the first quarter of 2026, a household earning the median income was only 78.3% of the way towards being able to afford a house. That assumes they made a 20% down payment and that no more than 28% of their income went to housing. Oxford projects affordability to continue to decline over the next decade as the costs of home ownership outpace incomes.
Oxford’s index was over 100 between 2016 and 2022, meaning that homes were mostly affordable. That changed in the post-pandemic era, when soaring prices and rising mortgage rates combined to push monthly payments for newly bought homes out of reach for typical incomes.
By contrast, the NAR’s affordability measure dipped during the pandemic but has been above 100 since August 2025.1
There are several reasons the two measures paint different pictures of affordability. For one thing, the NAR uses the Census Bureau’s median family income, whereas Oxford uses median household income as its benchmark.
The Census Bureau defines a family as a household of at least two people, so the median family income is typically higher than that of households since they include single people.2
Oxford’s measure also includes several unavoidable costs that the NAR’s does not, including insurance, property taxes, and HOA fees.
The discouraging math of buying a house could help explain why the public has become increasingly pessimistic about the economy, despite the fact that incomes have largely kept pace with inflation until very recently.
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