Housing Affordability Plummeted to Lowest Level on Record in 2023

Housing affordability plummeted this year to the lowest level on record amid the astronomical rise in mortgage rates, which put ownership out of reach for millions of Americans, according to a new report published by Redfin.

Just 15.5% of homes for sale in 2023 were considered affordable for the typical U.S. household, the lowest level on record since Redfin began tracking the data in 2013. It marks a steep drop from the typical 40% seen before the pandemic home-buying boom began, and the 20.7% figure recorded in 2022.

The decline in affordability is partially due to a drop in listings – which fell 21.2% over the course of the year – but is largely a result of the spike in mortgage rates and subsequent rise in home prices this year.

Combined, the two have helped to push the typical portion of average wages nationwide required for major homeownership expenses up to 35%, according to a separate report published by real estate data provider ATTOM.