May 15, 2025

Home Ownership Affordability

Housing Affordability Hits 20-Year Low as Costs Continue to Exceed Incomes

The affordability index has been decreasing steadily since September 2023, reaching 64 in January 2025 — the lowest level since 2005. Despite this downward trend, it remains far below the benchmark of 100, primarily due to high mortgage costs and elevated home prices.

The standard 30 percent income share threshold is another key benchmark for measuring affordability. In this context, the cost share of annual median income was 47% in February 2025, exceeding the threshold by the widest margin. In March 2021, this value was 30%. High home prices and elevated mortgage rates suggest that affordability will remain out of reach for median-income families for quite some time.

Affordability values are a key indicator to monitor, as they reflect the direction of demand in the real estate market.

Description: The Atlanta Fed’s Home Ownership Affordability Monitor measures the ability of a median-income household to afford a median-priced home. It accounts for mortgage costs, taxes, insurance, and uses the HUD's 30% income threshold for affordability. A cost above 30% of income is unaffordable, while below 30% is affordable. HOAM also provides an Affordability Index, where a value of 100+ indicates affordability, and below 100 indicates unaffordability.