Good News for Buyers: Home Affordability Improving in 2026

If you’ve felt priced out of the market or stuck waiting on the sidelines, there’s finally some encouraging news:

Buying a home is finally becoming more affordable.

Monthly payments have started to come down thanks lower interest rates, and buyers are starting to feel pricing pressures ease. That doesn’t mean homeownership is suddenly easy for everyone, but after a tough stretch, small improvements are meaningful.

Home Affordability Is Finally Improving

One of the clearest ways to track this change is to look at how much of a household’s income goes toward owning a home.

According to Zillow, housing is typically considered affordable when total housing costs take 30% or less of your monthly income. That includes your mortgage payment, property taxes, insurance, and basic maintenance.

For the past few years, many buyers were well above that mark, which pushed homeownership out of reach for a lot of households. But that’s starting to shift. Zillow research shows it’s taking less of a typical household’s income to buy a home than it did just a few years ago (see graph below):

We’re not all the way back to Zillow’s 30% threshold yet, so affordability is still tight in many markets. But the trend is improving, and that’s a big change from what buyers have been up against.

Why Homebuying Is Becoming More Affordable

Mortgage rates get most of the attention, and yes, rate movement plays a major role in monthly payment size. But it’s not the only reason affordability is improving. Three key trends are working in buyers’ favor right now:

1) Mortgage rates have eased

Rates are near their lowest level in more than three years, which can reduce monthly payments and expand buying power (see graph below):

2) Home price growth has cooled

Home prices aren’t falling nationally, but they’re rising more slowly than they were a few years ago. That matters because slower price growth helps keep purchase prices from jumping as sharply, which can make payments feel more manageable and the overall buying process more predictable.

3) Wages are growing faster than home prices

This is a major factor that often gets overlooked. When incomes rise faster than home prices, buyers can start catching up. Mark Fleming, Chief Economist at First American, explains:

“When income growth exceeds house price growth, house-buying power improves—even if mortgage rates don’t decline meaningfully.”

None of this makes homes “cheap,” but it does help explain why the math is starting to work a bit better than it did even a year ago. In short, some of the forces that curbed affordability are finally easing. As Fleming again explains:

“Affordability remains challenging, but for the first time in several years, the underlying forces are finally aligned toward gradual improvement. Mortgage rates may drift down only slowly, but income growth exceeding house price appreciation will provide a boost to house-buying power — even in a higher-rate world. Affordability won’t snap back overnight, but like a ship finally catching a steady tailwind, it’s now sailing in the right direction.”

Because of these combined shifts, many economists expect affordability to continue improving in 2026.

Where Are Homes Becoming Affordable First?

So how much will affordability improve, and where will it show up first? In some places, the difference could be noticeable. Zillow says some markets are expected to fall back under their affordability threshold (30% of income or less) by the end of the year (see graph below):

But you don’t have to live in one of those specific markets, and you may not have to wait until year-end to see improvement. Many areas are already trending in a better direction.

That’s why your next best step is local: talk to a real estate agent who understands what’s happening in your market. The national headlines don’t always reflect what’s going on neighborhood by neighborhood, and you might be closer to buying than you think.

Conclusion

For the first time in a while, home affordability is easing, and that’s an important shift for buyers.

And because the pace of improvement varies by location, understanding what’s changing locally can make all the difference. If you want to see how these trends are playing out where you live, connect with a local real estate agent to talk through your options.