After five years of declining affordability, homebuyers are getting signs of improvement, according to figures released Wednesday by Redfin.

For the past five years, since the pandemic homebuying boom started driving up home prices, the income needed to afford a home had been rising on a year-over-year basis nearly every month, the Redfin report stated. After peaking at more than $122,000 in June 2025, prospective homebuyers now need to earn $111,252 annually to afford the typical U.S. home for sale. This is down 4% from $115,870 one year ago.

While affordability has improved in 37 of the 50 most populous metropolitan areas, there are still only 12 metros where the typical household, earning an estimated $86,185, makes enough money to afford a median-priced home. This approximately $25,000 gap is keeping lower earners still priced out by a wide margin.

The decrease in income needed to buy a home has also shrunk the gap between buyers and renters to its lowest margin in three years, according to a separate Redfin analysis. U.S. residents need to earn $76,020 annually to afford the typical rental, compared to the $111,252 needed to affordably purchase the typical home. That 46.3% gap is the lowest it has been in three years since peaking at 66.2% in late 2023 ($120,609 needed to buy, versus $72,572 needed to rent).

Another challenge for renters is that while housing affordability is improving, rental costs are higher than they were a year ago. According to Redfin’s report, the median asking rent nationwide is $1,901, just $15 under its all-time high six months ago, and up 2.1% year over year. But with wages rising at 3.7% year over year, rental affordability has improved slightly.

Dallas saw the biggest affordability improvement among top metros, with the income required to afford a typical home falling 7.4% year over year to $112,175. Sacramento, Calif., declined 6.8% to $148,102, and Jacksonville, Fla., fell 5.9% to $97,898.

For those metro areas, the typical monthly housing payment in Dallas is $3,191 per month, down about $300 from $3,426 per month a year ago. In Sacramento, the typical monthly housing payment is $3,752, down from $4,090, and in Jacksonville, it’s $2,161, down from $2,337.

Redfin economists expect affordability to continue gradually improving throughout the year as wages continue rising while housing costs stay mostly stagnant.

Chen Zhao, Redfin’s head of economics research, stated that the overall numbers point to the housing affordability crisis showing signs of easing, which could allow more Americans to make the jump to homeownership.

“While housing remains historically expensive, the trajectory is finally starting to reverse, with the door to buying a home opening a bit wider rather than closing tighter,” Zhao stated. “But while affordability is improving, Americans are contending with other obstacles on the road to buying a home, like nerves about layoffs and economic uncertainty.”