KEY TAKEAWAYS

• Households with median incomes are far short of being able to afford the payments on median houses, according to an index of home affordability.
• Forecasters at Oxford Economics expect home affordability to continue to decline over the next decade.
• Several unlikely events could turn the tide, including a freeze in home prices and an unexpected drop in mortgage rates.

An economist has calculated what it would take to make the U.S. housing market affordable. The bad news is that the answer is years, and several small miracles.

That’s the upshot of an analysis published Tuesday by Nancy Vanden Houten, Oxford Economics’ U.S. lead economist. Her Housing Affordability Index tracks whether people with typical incomes can afford typical homes. Currently, the answer is a resounding “no.”

What This Means For The Economy

Home affordability remains a weak spot in consumer finances despite rising incomes and a soaring stock market.

In order for the market to become “affordable” by 2033, home prices would have to stay flat and mortgage rates would have to be about half a percentage point lower than expected over the intervening years—events that Oxford described as “unusually favorable conditions.”

The new analysis sheds light on the daunting financial obstacles homebuyers face today, given current prices, incomes, and mortgage rates, especially if they don’t already own a home. Oxford’s index uses different data than the widely cited index published by the National Association of Realtors, and paints a far gloomier picture.

As of the first quarter of 2026, a household earning the median income was only 78.3% of the way towards being able to afford a house. That assumes they made a 20% down payment and that no more than 28% of their income went to housing. Oxford projects affordability to continue to decline over the next decade as the costs of home ownership outpace incomes.

Oxford’s index was over 100 between 2016 and 2022, meaning that homes were mostly affordable. That changed in the post-pandemic era, when soaring prices and rising mortgage rates combined to push monthly payments for newly bought homes out of reach for typical incomes.

By contrast, the NAR’s affordability measure dipped during the pandemic but has been above 100 since August 2025.

There are several reasons the two measures paint different pictures of affordability. For one thing, the NAR uses the Census Bureau’s median family income, whereas Oxford uses median household income as its benchmark.

The Census Bureau defines a family as a household of at least two people, so the median family income is typically higher than that of households since they include single people.2

Oxford’s measure also includes several unavoidable costs that the NAR’s does not, including insurance, property taxes, and HOA fees.

The discouraging math of buying a house could help explain why the public has become increasingly pessimistic about the economy, despite the fact that incomes have largely kept pace with inflation until very recently.