Affordability Improved in All 50 States in 2025, Giving Home Buyers a Boost

Mark Fleming is Chief Economist for First American, Santa Ana, Calif.

Affordability ended 2025 on its strongest footing in nearly three years. In December, the First American Data & Analytics Real House Price Index shows affordability improved nearly 9 percent compared with a year ago—the tenth straight month of year-over-year gains and the best level since 2022.

Preliminary January data suggest that improvement has continued into early 2026. The improvement was broad-based, with all 50 states and 48 of the top 50 markets posting annual gains. While affordability remains below its pre-pandemic five-year average, the recent improvement is a welcome respite for home buyers.

Last month, we examined the role inventory played at the national level in moderating price growth. Here is a closer look across individual markets reveals how strongly local supply conditions are shaping the pace of recovery.

Why is Housing Affordability Improving More Rapidly in Some Markets?

Local housing market dynamics are influencing the varying magnitudes of recovery in affordability. A useful way to understand the differences across markets is to compare supply levels today with what was typical just before the pandemic—specifically, the December 2018–2019 average.

Relative to the 2018–2019 pre-pandemic norm, market-specific inventory levels vary widely. The supply of homes for sale in some markets remains materially lower than the pre-pandemic period, while supply in others markets are roughly back to pre-pandemic levels.

Several markets—including some of the pandemic boom markets—now have meaningfully more inventory than they did before 2020. Across the top 50 markets, there is a clear positive relationship between where inventory stands relative to that pre-pandemic benchmark and the size of affordability gains. Affordability has improved the most in markets with inventory at, or above, pre-pandemic norms, while many markets with supply levels well below those norms still have positive, but more modest affordability gains.

When inventory levels are higher relative to historical norms, sellers face more competition and less pricing power, slowing or even reversing price growth. That moderation, combined with rising income and lower mortgage rates than a year ago, directly boosts house-buying power. For example, in Austin, Texas, inventory is roughly 50% above its pre-pandemic norm, nominal house prices are down 4% year over year, and affordability has improved by 12%. Tampa, Fla., where inventory is 21 percent above its pre-pandemic benchmark, and Dallas, Texas, at 13 percent above, show similar patterns.

On the other end of the spectrum are markets where inventory remains far below pre-pandemic norms. In Chicago, inventory is 52% below its pre-pandemic norm; in Philadelphia, it is 40% below. In those markets, affordability has still improved compared with a year ago, but nominal price growth has proven more resilient.

Not every market fits neatly into one category, but the overall relationship is unmistakable: where supply is closer to—or above—pre-pandemic norms, price growth is cooler and affordability recovery is stronger.

Supply is the Housing Market’s Pressure Valve

Affordability is improving across nearly the entire country and it’s improving faster in markets where supply has surged the most. Where inventory rises—whether toward normal or significantly beyond it—price pressure eases and household income has a greater chance to catch up. If supply continues to expand or, as in some markets, remains elevated in 2026, nominal price growth should stay restrained, allowing affordability to continue its gradual recovery.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)