Homes.com Finds First Year-over-Year Affordability Improvement Since 2020

(Photo: Michael Tucker)

The median home price increased nationwide 1.1% last year, but higher income growth and lower mortgage interest rates boosted affordability in 2025, according to Homes.com, Arlington, Va.

The data firm said home price appreciation continues to moderate, with the nationwide median rising from $376,025 in December 2024 to $380,000 in December 2025. Homebuyers have seen nationwide median sale prices between $370,000 and $395,000 for 22 straight months, with values typically reaching the higher end of that range during May-August and the lower end during December-March.

That subdued nationwide price appreciation rate, combined with higher incomes and lower mortgage interest rates, made homeownership more affordable during 2025–the first year-over-year improvement in affordability since 2020. In December 2024 buyers of a median-priced home could have expected to spend 2.0 weeks of earnings each month to pay for principal and interest on their mortgage, based on mortgage interest rates averaging 6.85% and weekly earnings averaging $1,220.

“Homebuyers are seeing an improvement in affordability at just the time when the inventory of homes available for purchase has been growing,” said Brad Case, chief residential economist for Homes.com. “The number of homes available for purchase grew 17% during 2025, but the earnings needed to buy the median home declined by more than 9% over the same period, partly because mortgage rates went down but mostly because incomes grew.”

Case noted “both buyers and sellers are likely to benefit” from the direction the market is taking.