Can Anyone Afford a Home in 2025? Here's Why It's So Hard

Written by David Dodge 

For many Americans, buying a home in 2025 feels like chasing a moving target. If you’re earning $75,000 a year—close to the average U.S. household income—you can only afford 21.2% of homes for sale as of March 2025. That’s just a smidge better than last year’s 20.8%, according to the National Association of Realtors Housing Affordability & Supply report. While this small uptick is the biggest affordability improvement for any income group, it’s not enough to fix the housing affordability crisis gripping the U.S. housing market. Let’s dive into what’s going on, why home prices in 2025 are so tough for most people, and where there’s a bit of hope.

What’s Behind the Housing Affordability Crisis?

The U.S. housing market is wildly unbalanced. Before the pandemic, a family earning $75,000 could afford nearly half of all homes for sale (49%). Today, they’re limited to just over one in five listings. In a fair market, these households should be able to afford 48.1% of homes—more than double what’s available now. To bridge that gap, the market needs 416,000 more homes priced at $255,000 or less. That’s a massive shortfall!

Households earning $100,000 aren’t faring much better. They can afford 37.1% of homes, up slightly from 36.9% in 2024, but that’s far below the 60.7% they’d need for a balanced market. We’re talking about a shortage of 364,000 homes priced under $340,000. For lower-income families making $50,000—about one in three U.S. households—the situation is even worse. They can only afford 8.7% of homes, down from 9.4% last year. In a balanced market, they should have access to 33% of listings, which would require 367,000 homes priced at $170,000 or less.

Meanwhile, if you’re earning $250,000 or more, you’re in a different world. High-income households can afford 80% or more of homes for sale, showing how the market is skewed toward the wealthy. For first-time home buyers and middle-class families, it’s like shopping in a store where most of the shelves are out of reach. As Nadia Evangelou, NAR senior economist, puts it, “For many first-time home buyers, navigating the current housing market still feels like window shopping.”

Why Is This Happening?

Several factors are driving the housing affordability crisis. First, home prices in 2025 have stayed high due to limited supply and strong demand, especially from high earners. Second, rising interest rates since the pandemic have made mortgages more expensive, eating into what buyers can afford. Third, construction of affordable homes hasn’t kept up with population growth or demand, especially for lower- and middle-income brackets. This creates a market where only the wealthiest can comfortably buy, leaving everyone else scrambling.

A Glimmer of Hope in the Housing Market

There’s some good news: more homes are hitting the market. In March 2025, the number of homes for sale grew by nearly 20% compared to last year, according to Realtor.com® chief economist Danielle Hale. Many of these new listings are priced for middle-income buyers, especially in regions like the Midwest and South. Cities like Akron, Ohio, Pittsburgh, Pennsylvania, St. Louis, Missouri, and Youngstown, Ohio are getting closer to a balanced market, where home prices align better with what people earn.

About 30% of the 100 largest metro areas are labeled “Areas Getting Closer to Balance.” These places have seen big jumps in affordable homes over the past year, with affordability gaps shrinking to within 10 percentage points of a balanced market. For example, Raleigh, North Carolina, Des Moines, Iowa, Grand Rapids, Michigan, and even San Francisco, California, are making strides. San Francisco, a famously expensive city, now has more affordable listings than before the pandemic—a rare win!

Where Home Prices Are Still a Struggle

Not every area is improving. 44% of the top 100 metro areas are “stuck in the middle,” adding a few affordable homes but not enough to change the game. Cities like Seattle, Washington, and Washington, D.C. saw modest gains, with affordable listings up by about 4 percentage points. But you still need to earn over $150,000 to afford half the homes in these markets. Meanwhile, 26% of metro areas—like Los Angeles, California, New York City, San Diego, California, and Spokane, Washington—are “Areas Falling Further Behind.” In these places, the gap between affordable homes and what people can pay is growing, making homeownership feel impossible.

From a state perspective, Iowa, Ohio, Indiana, Illinois, and West Virginia lead the pack, offering homes that households earning $75,000 can afford—often 45% or more of listings. On the flip side, states like California, Hawaii, Massachusetts, Montana, and Idaho have far too few affordable homes. Some states, like Florida, Colorado, Utah, Delaware, and Arizona, are making progress with more affordable listings added this year. Only Washington, D.C. has better affordability than pre-pandemic levels.

A Path to Fixing the Housing Affordability Crisis?

One promising idea is building smaller, more affordable homes. “If the promising trend of building smaller homes continues, that could be a meaningful step toward easing the housing affordability gap,” says Evangelou. Smaller homes are cheaper to build and buy, which could help first-time buyers and middle-income families. But it’s not just about building more—it’s about building the right kind of homes in the right price ranges, especially for those earning $50,000 to $100,000.

Policy changes could also help, like incentives for developers to focus on affordable housing or programs to assist first-time home buyers with down payments. For now, though, the U.S. housing market remains a tough place for many Americans dreaming of homeownership.

Conclusion: A Long Road Ahead, But Hope Remains

The housing affordability crisis in 2025 is a stark reminder that the U.S. housing market isn’t working for everyone. With middle-income households limited to just 21.2% of homes and low-income families stuck at 8.7%, the dream of owning a home feels out of reach for millions. While more homes are hitting the market and some regions are improving, the gap between home prices in 2025 and what most people can afford is still huge. The push for smaller, affordable homes and progress in states like Ohio and Iowa offer hope, but we need bigger changes—like more construction and better buyer support—to make homeownership accessible again. For first-time home buyers, staying informed and exploring creative strategies (see our tips below!) will be key to navigating this challenging market.