Reading this on Krawl? Register for free.
Unlock listen-aloud, reading history and personalised feeds — at zero cost.
Free registration unlocks the full Finance Desk
US Housing Affordability Improves as Supply Rises, Demand Cools
US housing markets are showing signs of increased affordability in specific regions like Denver and Honolulu, driven by rising inventory and a cooling in demand after the post-pandemic surge.
Shifting Affordability Dynamics
Housing markets in cities such as Denver and Honolulu are becoming more accessible for typical homebuyers. This shift represents a notable change in a market that has largely been challenging for buyers. While national home inventory has increased, post-pandemic price inflation has made many listings unaffordable for local buyers relative to their income. A May report from Realtor.com, in collaboration with the National Association of Realtors (NAR), details these trends.
The mismatch between buyer expectations and actual affordability remains acute in locations like Los Angeles and New York. However, some areas are seeing listing prices stabilize or decline, even as incomes continue to rise. Nineteen of the 100 largest metropolitan areas now show better alignment between listing prices and incomes compared to pre-pandemic levels. New Orleans and Houston, for instance, have maintained increased inventory. Conversely, San Diego and San Jose, California, face affordability strains that predated the pandemic.
Market Adjustments and Buyer Challenges
The housing market has seen incremental improvements driven by pandemic-era shifts. Nationwide inventory is gradually recovering, bolstered by a steady influx of new properties hitting the market. The severe seller's market that characterized the past few years is beginning to ease.
Housing analysts have observed an increase in homes available for sale, which helps to improve market affordability. However, a significant obstacle remains: many homes are priced too high for potential buyers. This inventory imbalance disproportionately affects families earning around USD 75,000 annually. Although households at this income level can afford homes up to USD 261,100, properties within this price range constitute only 23% of national listings, according to the report.
Hannah Jones, a senior economist at Realtor.com, a platform operated by News Corp and The Wall Street Journal, noted that despite recent income gains, many middle-income buyers still struggle to find suitable homes due to limited entry-level inventory and strong competition.
Regional Variations and Outlook
The overall market misalignment has been easing since 2023, with home price growth slowing, mortgage rates plateauing, and incomes continuing to rise. Still, the market is more misaligned than before the pandemic, as detailed in the NAR and Realtor.com study.
Denver and Honolulu stand out as exceptions. Following a pandemic-era supply crunch, Denver has seen a substantial increase in new inventory. The added supply has helped to moderate home prices, combined with consistent wage growth. Jones explained that this has significantly improved affordability in Denver. Overall, the alignment between market conditions and buyer capacity is better than before the pandemic boom.
Despite these improvements, many emerging markets remain challenging. Buyers in cities like San Diego continue to face considerable hurdles, which were present even in 2019.
Found this useful? Share it!
Interested in Finance Education?
Explore our CFA and investing courses — built for serious learners.
