• A new Zillow analysis shows a median-income U.S. household can now afford a $331,483 home. That is a $30,302 improvement since last year and the highest affordable price since March 2022.
• A median-income household has seen roughly 82,300 more homes come into their budget than a year ago, according to Zillow’s analysis.
• Zillow forecasts further dips in mortgage rates this year, which would lead to additional improvements in buying power. 

Improving affordability points to a more active home shopping season this spring. A median-income U.S. household can now comfortably afford a $331,483 home (assuming a 20% down payment). That’s just over $30,000 more than a year ago. Lower mortgage rates and rising incomes have made the difference. 

The typical mortgage payment — excluding taxes and insurance, and assuming a 20% down payment — is 8.4% lower than a year ago. Home value growth has flattened and mortgage rates have fallen from an average of 6.96% in January 2025 to 6.10% last month, while incomes have edged higher. Together, that gives a median-income household an extra $30,302 in buying power. 

While affordability is still challenged — a median-income household would spend 32.3% of that income on a typical mortgage payment — that additional $30,000 in buying power can mean the difference between settling and choosing for home buyers this year. 

That puts buying power at its highest level since March 2022, when mortgage rates were still below 5%. The recent low point was in October 2023 at $272,224. Mortgage rates averaged 7.62% that month, the highest average in any month since 2000. Zillow expects rates to fall further through 2026, which would unlock additional buying power for home shoppers. 

Buyers see the biggest boost in expensive markets. In the San Jose metro area, a median-income household has gained nearly $74,000 in buying power compared to a year ago, the largest increase among major metro areas. San Francisco buyers have seen a $56,115 boost, followed by Washington, D.C. ($48,881), San Diego ($46,506) and Boston ($46,390). 

In practical terms, a median-income household can now afford roughly 82,300 more homes for sale than a year ago. In addition to improved affordability, that also reflects the continued inventory recovery, with 6% more homes on the market in January than a year earlier. The nearly 447,000 homes a median-income household could afford today represent 40.3% of listings — up from 34.8% a year ago.

In markets where home values have fallen, buyers’ dollars stretch even further in real terms with today’s lower mortgage rates. Houston leads the nation in affordable inventory growth, with just under 4,000 more listings within reach for a median-income buyer compared to a year ago. Phoenix follows with 3,434 additional affordable homes, ahead of Dallas (3,267), Miami (2,981) and Atlanta (2,279). Home values have fallen since last year in each of those markets. 

What this means for home buyers in 2026:

• Improving affordability and rising inventory mean buyers should have more options within reach than in recent years. A $30,000 increase in buying power can open up a different neighborhood, bigger home or a home with fewer compromises.
• With more prospective buyers able to afford a home, we will likely see more housing market activity in 2026. Zillow forecasts a 4% rise in existing home sales over 2025. 

*Table ordered by market size 

**For a median-income household to spend no more than 30% of income on the monthly mortgage payment, excluding taxes and insurance, and assuming a 20% down payment