This is the seventh consecutive year where home prices are rising significantly, and buyers across the nation have been stuck in the whirlwind of fluctuating affordability. Rising mortgage rates, home prices, insurance premiums and high borrowing costs outpaces the wage growth for many buyers.
Although the mortgage rates have been in the low 6% range in late 2025, the lowest yearlong, when paired with asking price of homes, affordability still remained a big question.
Affordability and buyer behavior
Some buyers are automatically sidelined as monthly payments for mortgages are marked toward an inclined graph and the income is relatively low to match them. Suburbs and small metros have increasing demands, as they remain affordable than bigger cities. This gives buyers the space between expenses and income, making it manageable to live with dignity.
What could make homes more affordable
An analysis conducted by realtor.com showed how the current housing market was considered and how it can be transformed to 2019’s housing. The mortgage rate for 2019 was 21% of the median household which has risen to 30% today. There could be one of the three possibilities which can result in making the situation true:
- Mortgage rates which are currently 6.15% falls to 2.65%
- Incomes Rising to 56%, from a median of $84,763 to $132,171
- Home Prices falling to 35%, from a median of $418,000 to $273,000
Looking forward in 2026
Housing affordability is expected to be the spotlight for this year since President Donald Trump has announced “the most aggressive housing reform in history.”
Realtor.com’s forecast for the 2026 market indicates that mortgage rate stabilization and higher than the rate of growth of prices would lead to a slight improvement in affordability. For the first time since 2022, the average percent of income spent on housing costs is forecasted to drop below the important 30% threshold.
Next year, the interest rate is forecast to range around 6.3%, which is a slight percentage drop compared to 2025. This should encourage more purchasers to come off the sidelines.
Experts warn that the wider affordability gap, which has been formed by years of fast home price growth, won’t go away quickly without significant rate decreases.
What this means for brokers and investors
For brokers the primary thing to understand is monthly mortgage payments. The listing price is a secondary thing, but the main concern for buyers is monthly payment which drives their interest in homes. For investors choosing the right small metro is crucial. If the metro offers affordability and good lifestyle, the value can increase significantly and long-term appreciation could be gained. It could be easier for the property to find tenants.
