Housing affordability improved year-over-year for the ninth consecutive month in November 2025, reaching its strongest level since the summer of 2022, according to a First American economist. While affordability is still more than 63 percent below its pre-pandemic, five-year average, the improvement trend has become increasingly clear — and increasingly durable, said First American Chief Economist Mark Fleming.
Fleming explained that the forces that crushed affordability after the pandemic have meaningfully weakened. House price growth has fallen to near zero, mortgage rates are no longer climbing and household incomes have continued to rise. Together, these shifts have powered the consistent improvement throughout 2025, especially more recently.
In November, the labor market continued to provide critical support for housing affordability, according to Fleming. Annual private-sector hourly wage growth increased 3.6 percent compared with a year earlier, boosting median household income by 3.5 percent year-over-year. Just that income growth alone increased house-buying power by roughly $13,100.
“Mortgage rates fueled another significant boost,” Fleming said in a release. “Rates were 0.57 percentage points lower than a year earlier, lifting purchasing power by approximately $23,500. Combined, higher incomes and lower rates mean homebuyers have about $36,600 more house-buying power compared with November 2024.
At the same time, Fleming noted house price appreciation has nearly flatlined. Nominal house prices nationally barely moved, increasing just 0.5 percent annually in November, down from 3.6 percent one year earlier and marking the slowest pace since 2012. For the eighth straight month, income growth outpaced house price growth, steadily increasing affordability.
“The dynamics fueling the improving affordability are benefitting homebuyers in markets across the country,” Fleming said. “Forty-seven of the 50 major metro areas we track posted year-over-year affordability gains in November, underscoring that the improvement is broad-based, rather than localized.”
Looking ahead, Fleming said the outlook for affordability will depend on whether today’s favorable dynamics persist. Wage growth is expected to remain positive, even as a cooling labor market could temper its pace. Mortgage rates, according to consensus forecasts, are likely to remain about the same this year. That places the spotlight on house price growth and, by extension, housing supply.
During the 2021-2022 period of rapid, double-digit price appreciation, when annual gains approached or exceeded 20 percent, inventory levels were more than 50 percent below what would be considered normal, according to Fleming. Extreme scarcity amplified competition and pushed prices sharply higher. Today, inventory has improved but remains below the historically normal level.
While Fleming noted inventory gaps have narrowed significantly from pandemic-era extremes, the most recent increase in scarcity raises an important caution flag. If the improvement in inventory stalls or reverses course, upward pressure on house price growth may re-ignite. Even with supportive income growth and stable rates, limited supply can constrain affordability gains.
“Nonetheless, life events — job changes, household formation, and relocation — will continue to draw both buyers and sellers off the sidelines in 2026,” Fleming said. “That gradual life-event re-engagement should support more inventory and more sales transactions. As long as inventory levels don’t deteriorate dramatically because more buyers than sellers enter the market, house price growth will remain in check, allowing affordability to continue to steadily improve. As the market improves in 2026, keep a watchful eye on inventory.”