The 30-year mortgage rate is now below 6% barely
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The housing market has yet to fully emerge from its winter hibernation, but improving affordability points to a more active home shopping season this spring.
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A median-income U.S. household can now comfortably afford a $331,483 home with a 20% down payment about $30,000 more than a year ago, according to a new Zillow analysis.
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Typical mortgage payments are down 8.4% from a year ago, as incomes rise and mortgage rates fall, boosting buying power to its highest level since early 2022.
After two years of strained affordability, home shoppers are finally seeing meaningful relief. A new Zillow analysis finds that a household earning the national median income can now afford a home priced at $331,483, assuming a 20% down payment.
Thats $30,302 more in purchasing power than in January 2025, driven by modest income growth, flattening home values and a notable decline in mortgage rates. According to Mortgage News Daily, the average 30-year fgixed-rate mortgage fell to below 6% for the first time since 2022.
The typical mortgage payment excluding taxes and insurance has dropped 8.4% from a year earlier. Mortgage rates averaged 6.1% last month, down from 6.96% in January 2025. Thats a sharp improvement from October 2023, when rates peaked at 7.62%, the highest monthly average since 2000. At that point, median-income buying power had fallen to $272,224, the lowest level in recent years.
Buying power is now at its strongest level since March 2022, when mortgage rates were still below 5%.
A more than $30,000 gain in buying power is meaningful for households that have been stretched thin by high rates, said Kara Ng, senior economist at Zillow. It can mean the difference between settling and choosing. That doesn't suddenly make this market affordable for everyone, but it does crack open doors that had firmly shut when rates peaked.
Expensive markets see the biggest jumps
The decline in mortgage rates has had an outsized effect in high-cost metro areas, where even small rate changes significantly alter monthly payments.
San Jose posted the largest annual gain in buying power among major markets, with a nearly $74,000 increase. A median-income household there can now afford a $741,686 home, up from $667,829 a year ago. San Francisco buyers gained $56,115 in purchasing power, while Washington, D.C. saw a $48,881 increase. San Diego and Boston followed closely, each posting gains of roughly $46,000.
In Los Angeles, the affordable home price for a median-income household rose to $421,030, up from $379,754 a year earlier. In New York City, buying power climbed to $381,237, compared with $346,450 last year.
More homes within reach
Improved buying power is translating into more options inthe housing market.
Nationally, a median-income household can now afford about 446,982 homes for sale roughly 82,300 more listings than a year ago. Those affordable homes represent 40.3% of all listings, up from 34.8% in January 2025. Total inventory has also improved, with 6% more homes on the market than a year earlier.
Some of the largest increases in affordable inventory are in markets where home values have declined year over year.
Houston leads the nation, with nearly 4,000 additional listings now within reach of a median-income buyer compared to last year. Phoenix added 3,434 affordable homes, Dallas gained 3,267, Miami added 2,981 and Atlanta saw an increase of 2,279. Home prices have softened in each of those markets, further stretching buyers dollars when combined with lower mortgage rates.
In Houston, the affordable home price rose to $298,282 from $274,173 a year ago, while the number of affordable listings jumped to 12,176 from 8,180. Phoenix saw affordable inventory climb to 7,951 homes from 4,517 last year. Dallas now has 10,979 affordable listings, up from 7,712.
Cautious optimism for spring
While affordability remains challenging compared with pre-pandemic norms, the steady decline in rates is providing momentum heading into the traditionally busy spring home shopping season. Zillow said it expects mortgage rates to continue easing through 2026, which could unlock additional buying power if home price growth remains subdued.
For buyers who have been sidelined by elevated borrowing costs, the recent shift may signal an opportunity to reenter the market particularly in metros where inventory is improving and prices have cooled.
For now, the market may still be shaking off its winter slowdown, but the early signs point to a spring with more choice and slightly more breathing room for buyers.
Posted: 2026-02-25 11:52:04

















