Housing market squeeze: The income needed to purchase a typical U.S. home is up 79% since 2020

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Here’s the annual U.S. household income needed to purchase the typical valued U.S. home:

• January 2020: $52,041
• January 2021: $52,087
• January 2022: $63,111
• January 2023: $87,092
• January 2024: $93,227
• January 2025: $98,900
• January 2026: $93,061

While the income needed to buy the median-priced U.S. home is +78.8% higher than it was in January 2020, it’s down -5.9% year over year.

Methodology: This Zillow calculation is conservative and assumes a 20% down payment and that the homebuyer spends less than 30% of their monthly income on the total monthly payment. This is a financed purchase, of course. For typical home value, Zillow economists used the latest Zillow Home Value Index reading.

Regional housing markets that have experienced outright home price corrections since the end of the pandemic housing boom have seen faster affordability improvements. That said, many of those places—like the Austin, Texas, metro area—also experienced greater home price overheating during the pandemic housing boom.

How did we get here?

During the pandemic housing boom, housing demand surged rapidly amid ultralow interest rates, stimulus, and the remote work boom. Federal Reserve researchers estimate that “new construction would have had to increase by roughly 300% to absorb the pandemic-era surge in demand.”

Unlike housing demand, housing supply isn’t as elastic and can’t quickly ramp up like that. As a result, the heightened pandemic-era demand drained the market of active inventory and sent national home prices soaring. The typical U.S. home value measured by the Zillow Home Value Index in January 2026 is still a staggering +44.7% greater than in January 2020.

That overheated home price growth, coupled with the ensuing mortgage rate shock, with the average 30-year fixed mortgage rate jumping up from under 3% to over 7%, created the fastest-ever deterioration in housing affordability in 2022. Over the past two years, housing affordability has improved some; however, it still remains challenged.

While the exact hit has varied, this decade’s affordability squeeze has spread across much of the country—just look at the two maps below.

The challenge, of course, is that incomes haven’t kept up. The gap has narrowed since the end of 2022; however, it’s still wide.

While the annual U.S. household income needed to purchase a typical U.S. home increased by +78.8% between January 2020 and January 2026, average weekly earnings of U.S. workers have risen by +30.7%, and overall U.S. consumer inflation has grown by +26% during the same period.