"According to the First American Real House Price Index, which adjusts prices for income and interest rate changes, housing affordability has posted its longest stretch of annual improvement since late 2019 and early 2020. Wage gains outpaced home-price appreciation in 2025 and mortgage rates eased off their peaks, helping repair some of the damage. But the progress has been far from uniform."
"In markets where inventory has expanded often in the South and West, where construction pipelines remain active and sellers have reset expectations buyers are regaining leverage, and affordability may continue to improve in 2026 as incomes and prices realign. But that does not apply everywhere. Many markets in the Northeast and Midwest remain supply constrained, keeping price pressures elevated. Limited inventory and persistent competition leave little room for meaningful affordability relief."
Ultra-low pandemic-era mortgage rates created a rate-lock effect that froze homeowner mobility and pushed existing-home sales toward decade lows. Wage gains outpaced home-price appreciation in 2025 while mortgage rates eased, producing the longest stretch of annual affordability improvement in the First American Real House Price Index since late 2019. National house-price appreciation cooled to its slowest pace since 2012. Markets with expanding inventory, notably in the South and West, are restoring buyer leverage and easing affordability. Northeast and Midwest markets remain supply-constrained, keeping price pressures elevated and limiting affordability relief. 2026 is likely to extend this uneven thaw.
Read at www.housingwire.com
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