Housing Affordability Hits Record Low in 2023, But Improvement Expected in 2024

With mortgage rates more than doubling in the past two years, only 15.5% of homes were affordable for the typical U.S. household in 2023, the lowest level since at least 2013. However, recent drops in mortgage rates could signal a turnaround in 2024.

According to Redfin, only 15.5% of homes on the market in 2023 were affordable for the typical U.S. household, marking the smallest share since at least 2013 and a significant drop from the 45% range that was more typical prior to the pandemic.
Mortgage rates have more than doubled in the past two years to the highest levels in decades, adding approximately $800 a month to a typical mortgage payment and putting home ownership beyond the reach of many Americans.
However, in the past two months, the average U.S. rate for a 30-year fixed mortgage has dropped from nearly 8% to 6.67%, potentially giving prospective buyers some financial relief and possibly helping to ease the acute shortage of properties that’s propping up prices.
Redfin's analysis, which covered 97 of the 100 most populous U.S. metropolitan areas, found that there were just 352,500 affordable listings in the first 11 months of 2023, down from almost 1.4 million in some pre-pandemic years.
Despite the bleak outlook, Redfin economists predict that 2023 is likely the bottom for the descent in affordability, and housing affordability is expected to improve in 2024.