Typical Home Should be Affordable in 20 Major Markets by Year’s End, the Most Since 2022
Trifecta of slow-growing prices, falling mortgage rates and rising incomes inform Zillow’s forecast.
Key takeaways:
- Home buying is becoming more affordable in more cities, with Zillow forecasting that 20 of the 50 largest U.S. metros will be affordable to buy in by the end of 2026 — the most since 2022.
- Mortgage payments are easing but still strain budgets, as monthly costs are $177 lower than their October 2023 peak, yet still require 32.6% of median household income nationally.
- Affordability is on track to improve without a price crash, as Zillow expects home values to rise 1.9% in 2026 and increase in 41 of the 50 largest metros, supporting homeowner equity while buyers regain footing.
A mortgage payment on a typical home is forecast to be affordable in 20 major metropolitan areas by the end of the year, the most since 2022.
Zillow expects slow but steady home value growth, falling mortgage rates and rising incomes to contribute to a nationwide improvement in affordability this year. In this case affordability means a mortgage payment on a typical house (priced at Zillow’s Home Value Index) that doesn’t require more than 30% of the median household income. When housing costs rise above that 30% threshold, they become a financial burden, leaving less in the budget for other essentials, such as groceries and transportation.
In the five years preceding the pandemic, mortgage payments (including taxes, insurance and maintenance) on a typical U.S. home required between 22.5% and 26.5% of median household income, assuming a 20% down payment.
Prices soared starting in 2020, and affordability declined sharply in 2022, when mortgage rates doubled. Affordability reached all-time lows in October 2023, when a typical mortgage required 38.2% of median household income. Homes in just seven of the nation’s 50 largest metros were affordable to buy at that time.
At the national level, a mortgage payment now takes 32.6% of median household income, already the best affordability seen nationwide since August 2022. That’s on track to improve to 31.8% by the end of the year.
The projected path to improved affordability is one of slow, gradual change, where incomes rise, price growth remains in check and rates gradually ease. It’s not a quick fix, but it would help buyers regain their footing while allowing homeowners to continue building wealth.
Key assumptions for Zillow’s forecast:
- Mortgage rates fall to near 6%, where Zillow expects them to end the year — although mortgage rates are notoriously volatile, and even further declines are possible.
- Home values grow by 1.9%, with the typical U.S. home value ending the year at $365,795 — higher than in 2025 but rather subdued compared to long-term norms.
- Incomes are expected to rise by 3.3% this year, according to Bloomberg Consensus.
This forecast also assumes borrowers put 20% down on their mortgage, which is a tall hurdle. Today, the typical home nationwide is valued at $359,078, according to the Zillow Home Value Index. A 20% down payment for that home is nearly $71,800. This would grow to over $73,000 by the end of the year, based on Zillow’s appreciation forecast. A smaller down payment for the same purchase would raise monthly costs and impact affordability.
Using the average mortgage rate from December (6.2%) and assuming a 20% down payment, the monthly cost for a typical home today is $2,337 including taxes, insurance, principal and interest. That’s down $92 per month from a year ago, and down $177 from a peak in October 2023. If Zillow’s outlook holds, that mortgage payment should reach $2,358 by the end of the year.
The only major metro where affordability is expected to worsen in 2026 is Hartford, which was also named Zillow’s hottest market for 2026. This widespread rise in affordability is doubly impressive because it’s not predicated on home value depreciation; home values are expected to rise in 41 of the 50 largest metros, including Chicago, Atlanta and Raleigh.
| Metro Area* | Zillow Home Value Index (ZHVI) | Expected Home Value Growth by End of 2026 | Monthly Mortgage Cost (20% Down) | Expected Change in Mortgage Cost by End of 2026 | Share of Median Household Income Spent on Mortgage (Affordability) | Expected Affordability by End of 2026 |
| United States | $359,078 | 1.9% | $2,337 | $21 | 32.6% | 31.8% |
| New York, NY | $703,649 | 1.5% | $4,833 | $30 | 55.4% | 53.9% |
| Los Angeles, CA | $942,285 | 1.4% | $5,697 | $18 | 67.3% | 65.4% |
| Chicago, IL | $336,642 | 1.8% | $2,404 | $23 | 30.4% | 29.7% |
| Dallas, TX | $358,609 | 0.3% | $2,550 | -$15 | 31.3% | 30.1% |
| Houston, TX | $303,084 | 0.8% | $2,119 | -$3 | 29.8% | 28.8% |
| Washington, DC | $568,566 | 0.1% | $3,617 | -$33 | 32.8% | 31.5% |
| Philadelphia, PA | $374,909 | 2.2% | $2,541 | $33 | 31.9% | 31.3% |
| Miami, FL | $466,944 | 2.8% | $3,312 | $62 | 46.7% | 46.1% |
| Atlanta, GA | $374,477 | 2.0% | $2,473 | $26 | 30.6% | 29.9% |
| Boston, MA | $710,709 | 1.8% | $4,553 | $35 | 44.0% | 42.9% |
| Phoenix, AZ | $443,733 | 0.7% | $2,622 | -$9 | 33.2% | 32.0% |
| San Francisco, CA | $1,101,500 | -1.7% | $6,766 | -$180 | 56.8% | 53.5% |
| Riverside, CA | $577,093 | 2.2% | $3,607 | $42 | 45.2% | 44.3% |
| Detroit, MI | $256,357 | 2.0% | $1,739 | $19 | 26.1% | 25.5% |
| Seattle, WA | $730,730 | 0.4% | $4,567 | -$28 | 46.6% | 44.9% |
| Minneapolis, MN | $377,251 | -0.3% | $2,562 | -$33 | 30.0% | 28.7% |
| San Diego, CA | $916,964 | 1.9% | $5,538 | $49 | 57.6% | 56.2% |
| Tampa, FL | $352,009 | 1.6% | $2,426 | $17 | 35.3% | 34.4% |
| Denver, CO | $559,554 | -1.1% | $3,467 | -$73 | 36.7% | 34.7% |
| Baltimore, MD | $391,913 | 0.4% | $2,522 | -$13 | 29.3% | 28.2% |
| St. Louis, MO | $263,846 | 1.7% | $1,841 | $15 | 25.9% | 25.2% |
| Orlando, FL | $381,302 | 1.9% | $2,573 | $25 | 36.2% | 35.4% |
| Charlotte, NC | $380,135 | 2.6% | $2,371 | $38 | 31.4% | 30.9% |
| San Antonio, TX | $274,336 | -0.4% | $1,983 | -$25 | 28.9% | 27.7% |
| Portland, OR | $536,849 | -0.6% | $3,402 | -$55 | 39.1% | 37.2% |
| Sacramento, CA | $568,802 | -0.6% | $3,574 | -$55 | 41.2% | 39.3% |
| Pittsburgh, PA | $218,845 | 0.0% | $1,519 | -$15 | 22.3% | 21.4% |
| Cincinnati, OH | $297,209 | 2.4% | $2,034 | $29 | 28.6% | 28.1% |
| Austin, TX | $419,798 | -1.9% | $2,973 | -$82 | 34.3% | 32.2% |
| Las Vegas, NV | $426,434 | 1.3% | $2,536 | $5 | 36.3% | 35.2% |
| Kansas City, MO | $312,751 | 2.2% | $2,161 | $28 | 29.4% | 28.9% |
| Columbus, OH | $319,035 | 2.4% | $2,188 | $31 | 30.0% | 29.5% |
| Indianapolis, IN | $284,684 | 2.6% | $1,874 | $30 | 27.0% | 26.6% |
| Cleveland, OH | $238,517 | 2.9% | $1,723 | $35 | 28.1% | 27.7% |
| San Jose, CA | $1,557,691 | -0.6% | $9,289 | -$150 | 63.2% | 60.2% |
| Nashville, TN | $446,311 | 2.2% | $2,726 | $31 | 35.2% | 34.4% |
| Virginia Beach, VA | $359,881 | 2.0% | $2,371 | $25 | 32.9% | 32.2% |
| Providence, RI | $502,821 | 3.3% | $3,297 | $77 | 46.1% | 45.6% |
| Jacksonville, FL | $343,902 | 1.4% | $2,317 | $12 | 32.3% | 31.5% |
| Milwaukee, WI | $366,247 | 2.6% | $2,365 | $38 | 34.8% | 34.3% |
| Oklahoma City, OK | $239,880 | 1.9% | $1,725 | $18 | 26.9% | 26.3% |
| Raleigh, NC | $429,840 | 1.7% | $2,719 | $18 | 30.4% | 29.6% |
| Memphis, TN | $239,011 | 1.2% | $1,647 | $4 | 27.7% | 26.9% |
| Richmond, VA | $381,554 | 2.4% | $2,412 | $34 | 33.3% | 32.7% |
| Louisville, KY | $270,246 | 1.3% | $1,759 | $6 | 27.2% | 26.4% |
| New Orleans, LA | $250,088 | -4.5% | $1,953 | -$104 | 35.8% | 32.8% |
| Salt Lake City, UT | $556,976 | 1.1% | $3,336 | $1 | 37.9% | 36.7% |
| Hartford, CT | $380,135 | 4.5% | $2,761 | $100 | 33.5% | 33.6% |
| Buffalo, NY | $272,868 | 3.1% | $1,675 | $35 | 26.6% | 26.3% |
| Birmingham, AL | $251,913 | 0.4% | $1,599 | -$10 | 24.2% | 23.3% |
*Table ordered by market size
December 2025 Market Report
Home values
- The typical U.S. home value is $359,078.
- The typical monthly mortgage payment, assuming 20% down, is $1,749. That’s down 5.2% from last year, and has increased by 98.8% since pre-pandemic.
- Home values did not climb month over month in any of the 50 largest metro areas in December. Values held steady in San Francisco (0%) and New York (0%), and declined by the smallest amount in San Diego (-0.1%), San Jose (-0.1%), and Los Angeles (-0.1%).
- Home values fell, on a monthly basis, in 48 major metro areas. The largest monthly drops were in Buffalo (-0.8%), Pittsburgh (-0.8%), Austin (-0.8%), New Orleans (-0.7%), and Detroit (-0.6%).
- Home values are up from year-ago levels in 25 of the 50 largest metro areas. Annual price gains are highest in Hartford (4.8%), Milwaukee (4.7%), Cleveland (4.2%), Chicago (3.9%), and Buffalo (3.7%).
- Home values are down from year-ago levels in 25 major metro areas. The largest drops were in Austin (-6%), Tampa (-5.2%), Miami (-4.5%), Orlando (-4.1%), and Dallas (-3.7%).
Inventory and new listings
- New listings decreased by 27.6% month over month in December.
- New listings decreased by 2.3% this month compared to last year.
- New listings are -14.1% lower than pre-pandemic levels.
- Total inventory (the number of listings active at any time during the month) in December decreased by 11.5% from last month.
- The median age of inventory, the typical time since the initial list date for active for-sale listings, was 90 days.
- There were 8.9% more listings active in December compared to last year.
- Inventory levels are -17% lower than pre-pandemic levels for the month.
Price cuts and share sold above list
- 16.9% of listings in December had a price cut. That is compared to 21.2% in November and 17.1% of December 2024.
- 24% of homes sold above their list price in November. That is compared to 24.6% in October and 26.9% in November of 2024.
Newly pending sales
- Newly pending listings decreased by 20.2% in December from the prior month.
- Newly pending listings increased by 1.9% from last year.
- Median days to pending, the typical time since initial list date for homes that went under contract in a month, is at 43 days in December, up 10 days since last month.
- Median days to pending increased by six days from last year.
Market heat index
- Zillow’s market heat index shows the nation is currently a neutral market.
- The strongest sellers markets in the country are San Jose, San Francisco, Hartford, New York, and Richmond.
- The strongest buyers markets in the country are Milwaukee, Miami, Louisville, Indianapolis, and New Orleans.
Rents
- Asking rents decreased by 0.2% month over month in December. The pre-pandemic average for this time of year is 0%.
- Rents are now up 2.1% from last year.
- Rents fell, on a monthly basis, in 34 major metro areas. The largest monthly drops are in Denver (-0.8%), Salt Lake City (-0.8%), San Antonio (-0.6%), Columbus (-0.6%), and Portland (-0.6%).
- Rents are up from year-ago levels in 44 of the 50 largest metro areas. Annual rent increases are highest in San Francisco (5.7%), Virginia Beach (5.4%), Chicago (5.2%), Providence (5.1%), and San Jose (4.9%).
