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Even though home price growth is slowing, buying a home doesn’t seem to be getting any easier.
Affordability for homebuyers declined in June for the fifth consecutive month, according to the National Association of Realtors’ latest Home Affordability Index.
According to the index, based on the median single-family home price of $446,400 and the average interest rate on a 30-year fixed-rate mortgage of 6.57%, the last month’s income needed to qualify for a mortgage was $109,152. This formula also assumes that the buyer will make a 20% down payment.
According to the index, home affordability has fallen since January, when the median home price was $398,200, the average interest rate was 6.19% and the income required to qualify for a mortgage was $93,552.
However, compared to June 2025, “home affordability actually improved slightly (last month) as income growth outpaced home price increases and mortgage rates declined slightly,” NAR chief economist Lawrence Yun said. In June 2025, interest rates were as high as 6.9% and you needed an income of $110,928 to qualify for a mortgage.
Experts say mortgage interest rates were below 6% in late February, but the outbreak of the Iran war and related inflation concerns caused rates to rise.
According to the Bureau of Labor Statistics, the latest inflation rate based on the Consumer Price Index showed an annual increase of 3.5%. According to BLS data, this is in line with the current annual growth rate of average hourly wages, which generally means that workers’ wage increases are being eaten up by inflation.
Additionally, home prices typically rise from winter to mid-summer as purchasing activity increases, Yun said.
How affordability for homebuyers could change
Going forward, “we expect affordability to improve slightly as the market passes the busy spring and summer seasons and buyers’ bargaining power increases,” Yun said.
“If mortgage rates ease towards their pre-Persian Gulf conflict levels at the beginning of the year, housing prices could further improve on a year-on-year basis,” Yun said.
The median price for existing homes of all types reached a record high of $440,600 in June, up 49.2% from June 2020, but price increases are slowing, according to NAR data. The median price in June was up 1.8% from a year ago, far below the double-digit annual increases seen during the pandemic housing boom.
Additionally, some markets are more affordable than others. According to the NAR Index, the Midwest and South are generally more affordable than the Northeast and West.
“Buyers in most markets will see prices still rising, but at a pace that gives incomes more room to catch up than in previous years,” Zillow chief economist Mischa Fisher said in a recent blog post.
Meanwhile, the bipartisan 21st Century ROAD to Housing Act, signed into law on July 11, aims to increase housing supply and address affordability, combining dozens of measures aimed at spurring home construction, expanding access to financing, and restricting purchases by large institutional investors.
But experts say it could be a while before homebuyers realize the benefits. According to Realtor.com, there is a housing shortage of more than 4 million units, and many economists say it will take time to close.
