Homes are on track to be affordable in 20 major US markets by year’s end

After several years in which the affordability bar has climbed higher and higher, the U.S. housing market is beginning to show signs of improvement for buyers. A combination of cooling home value growth and lower mortgage rates are bringing housing costs down to more manageable levels in a growing number of major cities.

A new forecast from Zillow suggests that by the end of 2026, the typical home in 20 of the nation’s 50 largest metro areas will be affordable for a median-income household. This prediction is based on the broadly accepted definition of affordability: spending no more than 30% of income on mortgage, property tax, property insurance and home maintenance. That would be the highest number of affordable markets since 2022.

Nationally, a median-income household now would spend about 32.6% of its income on monthly mortgage payments and homeowner expenses on a typical U.S. home, which is down from recent highs and the most favorable reading in nearly four years. Zillow expects that figure to edge lower, to 31.8%, by late 2026 if current conditions persist.

Economists say the improvement reflects a rebalancing housing market rather than a collapse in prices. Home values continue to rise in many areas, but at a slower pace. At the same time, mortgage rates have eased from their peak and wages have continued to grow, helping households regain some financial footing.

“This is what a small-wins year looks like for housing,” said Kara Ng, a senior economist at Zillow. “Rising incomes, subdued price growth and gradually easing mortgage rates would help buyers regain their footing while allowing homeowners to continue building wealth. These types of slow and steady affordability improvements are exactly what the housing market needs over the long run.”

Market trends in context

Affordability reached its breaking point in 2023, when mortgage rates climbed rapidly and monthly payments absorbed 38% of median household income nationwide. At that stage, only a small number of large metro areas met Zillow’s affordability benchmark.

The current outlook points to a wider recovery. Zillow expects affordability to improve in nearly every major metro area, with Hartford, Connecticut, as an outlier.

The forecast reflects expectations that mortgage rates will hover near 6% by the end of 2026, while income growth outpaces modest home values growth. Changes to any of those factors could alter the pace of improvement, particularly in higher-cost markets.

However, affordability remains strained in many parts of the country. Buyers in coastal cities still face high home prices and significant upfront costs, and affordability has not returned to pre-pandemic norms. What has changed is direction: The market is no longer moving decisively against buyers.

What this means for real estate agents

For real estate agents, improving affordability may translate into renewed activity from buyers who stepped back during the height of rate volatility. As monthly payments ease, especially in more balanced markets, some first-time buyers may reenter the search with clearer expectations and firmer budgets.

The uneven nature of the recovery places greater emphasis on local knowledge. Affordability gains vary widely by metro, making it critical for agents to help clients understand where conditions are improving and where financial constraints remain tight. In a slower, more balanced market, agents who can clearly explain pricing dynamics and financing realities may play a larger role in helping deals move forward.

The bottom line

The latest forecast points to a housing market that is finding its footing after years of rapid change. Affordability challenges persist, but are moving in the right direction. For buyers, agents and policymakers, the trend suggests a market that is becoming more predictable and, over time, more workable — not through dramatic shifts, but through steady improvement.