U.S. Housing Affordability May Take Until July 2036 to Normalize

U.S. housing affordability could take more than a decade to return to its August 2018 benchmark under a hypothetical scenario of mortgage rates between 7% and 8% and annual home-price growth of 2.1%, extending the timeline to July 2036 in one case.

The benchmark is a national median monthly mortgage-payment-to-income ratio of 30%. Returning to that level would indicate a recovery in relative affordability, but would not mean typical homes were broadly affordable for most households.

The scenarios depend on combinations of mortgage rates, home-price growth and income growth. They are hypothetical and are not forecasts.

With mortgage rates at 6% and home prices held flat, affordability could return to the benchmark by February 2029. If prices rise 2.1% annually, the estimated timeline moves to November 2031 at a 6% mortgage rate and July 2036 at 7%.

A separate hypothetical scenario in which rates remain near 7.5% while home prices stay flat would restore affordability in about six years.

The average 30-year fixed mortgage rate was 7.40% on Oct. 8, 2026, while the 15-year rate averaged 6.73%.

Buyer leverage is improving in parts of the market: Seller concessions appeared in 44.7% of U.S. home sales in August, and 15.8% included both a concession and a price cut.

“Many house hunters feel stuck between two bad options: Stretch themselves to buy at today’s rates, or wait for lower rates only to see prices climb further out of reach,” said Asad Khan, senior economist.

Khan added, “But prospective buyers shouldn’t get hung up on timing the market.”