The U.S. Median Income Rose to $80,610, but Home Values Are Also Soaring—and It’s Not Always Cheaper To Rent

Americans’ incomes have risen for the first time in four years, according to the U.S. Census Bureau. That’s good news for workers, but not necessarily for homebuyers.

Median household income rose to $80,610 in 2023, essentially the same as it was at its pre-pandemic peak in 2019. That represents a 4% jump from 2022. But home values have risen so sharply since before the pandemic that the salary bump barely affects where Americans can afford to buy a house.

“Given today’s mortgage rate and the 30% affordability rule of thumb, a household earning the 2023 median household income could afford a home priced up to roughly $285,000, assuming a 10% down payment,” says Realtor.com® senior economic research analyst Hannah Jones.

However, the Realtor.com August housing report shows that home prices now hover nationwide at a median of $429,995—nearly double what a buyer can reasonably afford.

“The U.S. median listing price was roughly $145,000 higher than this level in August, suggesting that the median U.S. household income would not be enough to purchase a home in much of the country,” Jones points out.

The (sort of) good news? While most of the country remains unaffordable for the average household, says Jones, “the median listing price was less than or equal to this [income] level in 10 of the 100 largest U.S. metros in August.”

In other words, the American dream of homeownership can be found in a few places. Here they are in order of affordability:

Detroit, MI

Median list price: $99,000

Toledo, OH

Median list price: $130,000

Cleveland-Elyria, OH

Median list price: $143,000

Akron, OH

Median list price: $145,000

Dayton-Kettering, OH

Median list price: $180,000

Rochester, NY

Median list price: $185,000

Scranton-Wilkes-Barre, PA

Median list price: $189,000

Buffalo-Cheektowaga, NY

Median list price: $220,000

Pittsburgh, PA

Median list price: $265,000

McAllen, TX

Median listing price: $299,000

The cost of renting is up, too

If none of these metros suits you, there’s always renting—but that isn’t exactly a bargain, either. According to the 2023 American Community Survey released by the Census Bureau, the cost of rent and utilities in 2023 rose faster than home values for the first time in a decade.

In 2023, rent increased 3.8%, compared with a 1.8% rise in inflation-adjusted median home values.

Although the rule of thumb has been that renters should pay no more than one-third of their income on rent, that is becoming increasingly difficult to maintain. According to the survey, over 21 million renter households spent more than 30% of their income on housing costs in 2023, representing nearly half (49.7%) of the 42.5 million renter households in the United States.

“The [monthly] median cost of housing for renters rose from $1,354 to $1,406” after adjusting for inflation, said Molly Ross, a survey statistician with the U.S. Census Bureau.

This leaves Americans getting squeezed whether they rent or buy.

“Climbing home prices and mortgage rates pushed many would-be buyers to the rental market,” says Jones. “Increased demand for rentals drove prices higher while home prices grew less quickly due to waning demand. If housing becomes more affordable, whether via lower mortgage rates, lower prices, or both, rental inventory is likely to see demand soften and rent growth ease. Likewise, more rental inventory coming online also has the potential to ease rent growth.”