AUSTIN – (By Dale King, Realty News Report) – That widely-advised housing affordability guideline that encourages homeowners not to spend more than 30 percent of their income on expenses accrued by a median-priced home is fading fast.
A new Realtor.com Affordability Report says the aforementioned payment standard has been kicked to the curb in nearly all American metros. In fact, the analysis says the average U.S. household had to part with 44.6 percent of its yearly earnings to cover the costs of a typical median-priced home as of May 2025 – well above the strongly advised 30 percent threshold.
As high mortgage rates and ascending home prices continue to swell the expenses of maintaining an average home, the Realtor.com study notes that only three of the 50 most populous metros in the U.S. are within financial reach for median-income earners to meet the 30 percent mean: Pittsburgh, Detroit and St. Louis.
“Earnings have risen, but homebuying costs have risen faster, meaning that adhering to affordability guidelines can feel challenging if not impossible in many housing markets across the country,” said Danielle Hale, chief economist at Realtor.com.
“While a few Midwestern markets still offer a path to homeownership for the median-income household who can make a 20 percent down payment, in most large metros, the dream of owning a home remains out of financial reach without significant changes to either housing supply or interest rates.”
Texas metros close to 30 percent rule
Homes in the Lone Star State have controlled most household expenses. And while all four regions in the study exceed the 30 percent mark, the gap is narrower than in many other communities.
Homes in the San Antonio-New Braunfels area tap the household kitty for 37.1 percent to keep a median-priced domicile ship-shape. The report lists the cost of a typical median-price home in May at $340,000 and slots annual household income at $73,281.
Next best is the Houston-Pasadena-The Woodlands area where the cost of a median-priced home in May was $372,500 and typical yearly household income was reckoned at $78,845. That resulted in an affordability score of 37.8 percent.
The Dallas-Fort Worth-Arlington area required a 39.6 percent dip into the household cookie jar to cover expenses for a median-priced home in May. The report divides the ticket on a median-price home of $440,000 by average annual income of $88,783 to come up with that figure.
Most costly, the report says, is the Austin-Round Rock-San Marcos area where a median-priced home costing $525,000 divided by yearly incoming revenue of $102,412 reaches an affordability rating of 41.0 percent.
Three MSAs pass affordability test
Residences ranked below the 30 percent standard include those in Pittsburgh where a home cost $249,900 in May – a figure that required a homeowner to part with just 27.4 percent of median income, assuming a 20 percent down payment and a 30-year fixed mortgage with an interest rate of 6.82 percent.
Similarly, at $270,000, the typical domicile in the Detroit market would consume just 29.8 percent of household income estimated at $72,500.
And finally, St. Louis registered a median home price of $299,900 in May – a figure that would have tapped the family’s finances to the tune of exactly 30 percent to pay off all home-related expenditures.
Realtor.com’s report says these metros remain attractive to both buyers and investors due to their relatively low home prices, but “sustained demand for low-priced dwellings threatens to erode affordability even in these low-price strongholds,” said Anthony Djon, founder of Anthony Djon Luxury Real Estate.
“Demand is picking up fast – especially at the lower price points. First-time buyers are moving with urgency because they know the window to buy affordably is narrowing.”
Left coast out of reach
On the West Coast, the share of income required to cover home expenses in California’s largest metros far exceeds the national norm.
As of May 2025, the typical Los Angeles home required more than 104 percent of a family’s median income, meaning an average householder would be unable to cover annual housing costs, even with zero spending on anything else.
That being said, it’s no surprise that 51 percent of households in the LA area are occupied by renters and just 49 percent of folks own their own homes, compared to a national home ownership rate of 65.1 percent.
Goal is affordability
The report cites several pathways to making housing more affordable: Raise incomes or lower housing costs. While higher wages could help, big pay increases can also boost housing demand, pushing home costs higher.
Lower housing costs can be achieved either by bringing down mortgage rates or home prices. The report says mortgage rates are not expected to move significantly from where they currently sit, and recent economic uncertainty makes it harder to predict the mortgage rate’s future.
Another solution? Build more affordable homes. Realtor.com says new home supply and new home construction, especially affordable domiciles, can help relieve price pressure in tight housing markets.
July 15, 2025 Realty News Report Copyright 2025
Photo credit: Cynthia Lescalleet, CALpix Copyright 2025
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File: The 30% Rule Nearly Extinct in Household Budgets The 30% Rule Nearly Extinct in Household Budgets