A newly released national housing report shows how far the homebuying bar has moved for US buyers. At the end of 2025, a household needed $120,800 in annual income to afford a median-priced home, up from $68,700 five years earlier, according to the latest annual housing report.
The affordability gap is still shaping the 2026 market. Existing-home sales improved in May but remain historically low, while the median existing-home price reached $429,300. For agents, the data points to a smaller qualified buyer pool and a bigger need to ground client conversations in payment capacity, not list price alone.
What the $120,800 benchmark includes
The benchmark assumes a 30-year fixed-rate mortgage, 3.5% down payment, mortgage insurance, property insurance, property taxes, and a 31% debt-to-income ratio. After those costs are included, the monthly cost on the median-priced home was about $3,120 at the end of 2025.
The figure is national, not local. Buyers needed more than $100,000 to afford the median-priced home in 169 of 387 US metros in late 2025, up from 31 metros in 2020. Closing costs, moving costs, repairs, and maintenance are not included, so agents should treat the number as a payment benchmark, not a full ownership budget.
Why buyers misjudge affordability
Most buyers start with list price, but lenders qualify them on payment. Prices, rates, taxes, insurance, and mortgage insurance all shape that number.
Only 32% of US households met the $120,800 threshold at the end of 2025. Among renter households, the share was 16%. That is especially important for first-time buyers, who often have to clear the payment test while saving for a down payment.
The price-to-income ratio adds context. In 2025, the median sales price for an existing single-family home was nearly five times median household income. During the 1990s, the average ratio was 3.2. Even with mortgage rates easing from 7.04% in January 2025 to 6.23% in the fourth quarter, payments remained near record highs.
How agents can size the local buyer pool
Agents should turn the national benchmark into a local buyer-pool estimate. Start with the local median home price, then estimate the payment using principal, interest, taxes, insurance, mortgage insurance, and likely HOA dues. From there, convert the payment into a rough income threshold using lender-style affordability assumptions.
Compare that threshold with local household income data. In buyer consultations, this shifts the conversation from “What price range are you searching for?” to “What monthly payment can you qualify for?” In listing appointments, it helps sellers see how a list price affects the number of households that can finance the home.
The same approach can sharpen prospecting. High-income renters who clear the local threshold may still need down-payment help or credit work, but they are closer to transaction-ready than renters far below the qualifying income.
The 2026 market still runs on payment math
Affordability remains one reason transaction volume is constrained. Existing-home sales were unchanged from 2024 at 4.1 million in 2025, a 30-year low. The latest existing-home sales report put May 2026 sales at a 4.17 million annualized pace and the median existing-home price at $429,300.
Agents can adjust without waiting for affordability to normalize. The current market rewards payment-first buyer consultations, listing strategies tied to qualified demand, and prospecting aimed at renters whose income matches local prices.