Home Affordability Improves, But Still Below Median Price

What Buyers Need to Know as Rates Decline and Inventory Slowly Increases

Published on Mar. 7, 2026

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After years of soaring prices and limited inventory, a glimmer of hope is emerging for prospective homebuyers. U.S. households with a median income of approximately $86,300 can now afford a home priced at $331,483 - a $30,302 increase compared to the previous year, according to a recent Zillow report. This improvement in affordability is driven by a recent decline in mortgage interest rates, though significant challenges to affordability persist as home prices remain above what the median-income household can afford.

Why it matters

The increase in affordability could bring more buyers into the housing market this spring, but without a significant increase in housing supply, the influx of new buyers could simply push prices upward again. This highlights the ongoing challenges of housing affordability and the need for solutions to address the broader housing shortage.

The details

A key driver of the improved affordability is the recent, albeit slow, decline in interest rates. As of February 27th, the average rate for a 30-year fixed mortgage stood at 5.99%, down from 6.79% a year ago. Even small fluctuations in rates can have a substantial impact on affordability, with a half-point drop in mortgage rates estimated to save a typical U.S. homeowner around $1,000 annually. However, the amount a median-income household can afford remains below the national median price for single-family homes, which was $400,300 in January.

  • As of February 27th, the average rate for a 30-year fixed mortgage stood at 5.99%.
  • The median home price was $400,300 in January.

The players

Zillow

An online real estate marketplace company that provides data, information, and tools for home buyers, sellers, renters, and real estate professionals.

Kara Ng

A senior economist at Zillow.

Lawrence Yun

The chief economist at the National Association of Realtors (NAR).

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What they’re saying

“A half-point drop in mortgage rates could save a typical U.S. Homeowner around $1,000 annually.”

— Kara Ng, senior economist at Zillow

“Without a significant increase in housing supply, the influx of new buyers could simply push prices upward again.”

— Lawrence Yun, chief economist at NAR

What’s next

The increase in affordability is expected to bring more buyers into the market this spring, which could put further upward pressure on home prices if housing supply does not increase significantly.

The takeaway

While the recent decline in mortgage rates has improved home affordability, the median-income household still cannot afford the national median home price. This highlights the ongoing challenges of housing affordability and the need for solutions to address the broader housing shortage.