Housing is Finally Feeling More Affordable For U.S. Households

New data from Morning Consult shows that the current, pervasive cycle of scarce and unaffordable housing has started to reverse, as consumers are reporting notable improvement in both affordability and availability of homes compared with a year ago. 

From a distance, the housing market has appeared weak for several years: Home sales cratered in the wake of interest rate hikes beginning in 2022 and volumes have failed to recover. There has been a disconnect with prices, however, as median home sale prices continued to trend higher at a national level (albeit at a slowing pace). With new home building making up a relatively small share of total housing stock, high interest rates and unaffordable prices became a self-perpetuating cycle. As demand for homebuying fell, so too did supply, since most sales are for existing units whose occupants are as reluctant to take on higher costs as anyone else. Consequently, the simultaneous contraction in both demand and supply prevented a decline in home prices in many markets.

Net affordability improved over the past year

One year after running our first housing affordability survey, we re-ran the same survey among a representative sample of 2,200 U.S. adults in August 2025. The latest results show a notable improvement in perceptions of housing affordability. Though the share who said at least some homes in their area are affordable remained lower than the share who said most are not, net affordability increased by 11 percentage points. There was particularly strong improvement in net affordability reported by adults from households earning $100,000 or more; the metric for this group rose 27 percentage points, from -8 percent to 18 percent. Middle and lower income adults’ net reported housing affordability improved by smaller margins since last year, rising by 12 and 5 percentage points, respectively. 

Supply growth is beginning to help thaw out the housing market

The chronic undersupply of housing remains a challenge, with 24% more adults reporting too few available homes in their area than the share reporting too many for-sale homes. However, there has been slight improvement relative to last year, suggesting that growing supply is a partial contributor to affordability progress.

Once again, improvement in supply was more pronounced among high-income adults. Net housing shortages reported by this group fell 14 percentage points from a year ago, whereas the lowest income group actually reported a 3 percentage point increase in housing insufficiency. This discrepancy could be indicative of more housing supply becoming available in higher-income neighborhoods, suggesting the thaw in the housing market is disproportionately taking place at the higher end of the price spectrum. Alternatively, there may be differences in awareness across income groups, as lower earning households are more likely to be renters rather than buyers, and thus potentially less attuned to more listings hitting the market. Regardless, the perceived increase in housing supply appears to explain some but not all of the improvement in affordability since last year. 

Solid household finances are supporting home purchasing power

Despite softer hiring, occasionally skittish consumer sentiment and a recent reheating of inflation, consumer finances have remained relatively robust over the past year. Morning Consult’s Consumer Health Index (CHI) has shown marked improvement over the past 12 months, consistent with trends tracked by government data. Real incomes have continued to grow, and the household savings rate has hovered close to its pre-pandemic level over the past year. Morning Consult’s Financial Obligations Ratio (FOR) shows little increase in debt burdens relative to a year ago, suggesting consumers are largely managing to keep up with spending without needing to lean into credit. On the investments front, the S&P 500 was up about 12 percent year-to-date at the time of this writing–a development that particularly benefits the high-income cohort, who are disproportionately likely to own stocks. 

While growing supply tells part of the story of rising home affordability, improving household finances appear to be an important component as well. In our housing affordability report last year, respondents reported down payments as one of the most prohibitive factors in purchasing a home. On net, 23 percent of respondents in August 2024 could not afford a down payment for a home they’d be willing to live in (indicative of insufficient savings or liquid investments), compared with a net share of 15 percent who said they couldn’t afford a monthly mortgage payment for a suitable home (indicative of monthly income insufficiency).

A year later, both of these metrics have improved, with down payment net affordability climbing 9 percentage points and mortgage payment affordability rising by 7 percentage points. Once again, the lowest earners had the smallest improvement, while the high-income cohort had more dramatic advances in affordability. This was particularly true for the down payment attainability, likely tied to the greater importance of stock market values to this group.

All eyes on interest rates…and consumer financial health

Going forward, the path of interest rates will play a critical role in determining whether the trend toward improving affordability will continue or subside. Mortgage rates had already come down in anticipation of the rate cuts announced by the Federal Reserve in September. However, the multiple drivers contributing to consumers’ improving affordability perceptions over the past year serve as a reminder that lower rates alone likely won’t solve the housing freeze. Supply remains limited, particularly at lower price tiers, and lackluster housing starts don’t look likely to provide a near-term solution. Given this constraint, pent up demand from those waiting for lower mortgage rates could even conceivably be counterproductive to affordability. Finally, consumer financial health will be of utmost importance across the income spectrum in the coming months to enable a true resurgence in homebuying.