✅ Signs That Affordability Is Gradually Improving
• Mortgage Rates Have Moderated — Improving Monthly Payment Burdens
- Recent data show 30-year fixed mortgage rates have drifted down to around 6.3%–6.4% in mid-2025 — one of the lowest levels since late 2024. Morningstar+2HousingWire+2
- As a result, monthly mortgage payments for a typical home have eased slightly. One report cites the average payment on an “average-priced home” as roughly $2,148/month, about 30% of median U.S. household income — down from nearing 32% earlier in the year. HousingWire
• Home-price Appreciation Has Slowed, and Inventory Is Slowly Rising
- National year-over-year home price growth has decelerated significantly. In many markets, house-price appreciation is now hovering around 2%–3% per year. Mortgage Professional+2Morningstar+2
- The supply of homes for sale is creeping up. As of end-2024, the inventory of existing homes rose nearly 15% from the prior year, increasing the “months’ supply” (though still short of a fully balanced market). HUD User+2blog.firstam.com+2
- More listings — especially in certain regions — mean that buyers have moderately more choice, which helps relieve bidding pressure and may curb runaway price growth. Mortgage Professional+2National Association of REALTORS®+2
• Real Incomes Are Rising, Giving Buyers More Buying Power
- Median household incomes have increased at a moderate clip, helping offset some of the cost pressures from higher mortgage rates and elevated home prices. Mortgage Professional+2Morningstar+2
- According to one index tracking affordability, “consumer house-buying power” increased about 5.6% year over year (as of early 2025), representing a real improvement in what households can afford. Mortgage Professional
• Some Metrics Show Affordability Has Stabilized or Slightly Improved
- The analysis by one major housing data firm calls 2024 the first year in four in which overall affordability did not worsen. That is, the decline in affordability seen in prior years leveled off. Redfin
- Another market-outlook note argues that the housing market “has found its floor” — meaning that recent months of stabilization may mark the end of the steepest corrections, and a gradual “march toward balance.” Mortgage Professional+1
⚠️ But Challenges Remain — Affordability Is Still Weak by Historical Standards
• Despite Gains, Affordability Remains Far from “Normal”
- Even with recent improvements, housing remains “over 30% less affordable than in early 2022,” before rapid rate hikes. Mortgage Professional+1
- Another widely cited yardstick, the “affordability index,” remains well below historical norms. Some recent estimates place it about 25% lower than its long-term average. portfolio-strategy.apsec.com+1
• Disparities Across Regions — Gains Are Uneven
- Affordability improvements vary starkly between different metro areas. In some regions, home prices remain high or continue rising, offsetting rate relief and income gains. Mortgage Professional+2National Association of REALTORS®+2
- For many middle-income households — often earning in moderate income brackets — the portion of listings they can actually afford remains small. National Association of REALTORS®+1
• Sales Activity Remains Low — Demand Still Constrained
- In many parts of the country, existing-home sales remain weak, and in some areas, new-home sales are even trending downward — showing that many buyers remain priced out or discouraged. Mortgage Professional+2TD Economics+2
- New homebuilders face headwinds too — rising costs for materials, competition from resale homes, and tight affordability mean builders may not ramp up construction quickly enough to relieve supply constraints. Capital Economics+2HUD User+2
• Uncertainty Around Mortgage Rates and Broader Economy Still Looms
- Many forecasts suggest mortgage rates may hover in the 6.5%–7% range for the foreseeable future — which limits how much affordability can improve without a deeper economic shift. Capital Economics+1
- If supply growth stalls or wages fail to keep up, affordability gains could stagnate or reverse. blog.firstam.com+1
🎯 What a “Slow Rebound” Means for Potential Buyers (and When to Act)
- For many buyers the next 12–24 months may offer milder—but meaningful—improvements in affordability, especially if rates remain stable, supply improves, and wages continue to rise.
- Rather than expecting a “return to pre-pandemic cheapness,” buyers should consider a more modest baseline: homes may not get dramatically cheaper, but monthly payments and ownership costs could become more manageable for the average household.
- Buyers with flexibility — e.g., those not tied to expensive coastal metros — stand to gain the most as regional divergence grows.
- For middle-income households, slightly lowering interest rates + modest price growth + income gains could finally make some previously out-of-reach homes realistically affordable.
- That said — a full rebound (i.e., broad affordability similar to the 2010s) will likely take more time, and may require structural changes: more supply, stable interest rates, and steady income growth.
🔎 Bottom Line — “Slow Rebound” Seems Real, But Don’t Expect a Boom
Yes: based on multiple housing-market measures (mortgage rates, incomes, inventories, home-price growth), affordability in the mid-2020s is slowly improving. We’re seeing a gradual shift away from the worst years immediately following ultra-tight monetary policy and pandemic-era mania.
But this isn’t a boom. Housing remains well less affordable than in previous decades, and gains are uneven and fragile. For many buyers — especially in high-cost markets — homeownership remains a stretch.
The slow rebound underway may, however, mark the beginning of a new, more sustainable equilibrium: not rock-bottom prices, but a level were buying and selling homes becomes more balanced, and homeownership returns to reach a broader cross-section of households.