For the first time since 2021, the share of prime homebuying-age renters who can afford a typical home has stopped its steep decline, signaling a potential turning point for the U.S. housing market.

According to new data released by Zillow research on Thursday, 20.4% of renter households aged 29 to 43 could afford the monthly cost of a typical home with a 5% downpayment in 2024. This slight improvement from 20.2% in 2023 marks the first stabilization since a massive affordability collapse wiped out nearly 2 million “buy-ready” households over the previous two years.

Zillow’s estimates reveal that the number of ownership-ready renters in their prime homebuying years plunged from nearly 5 million households in 2021 to 3.3 million in 2022, and bottomed out at approximately 3.1 million in 2023. And while it ticked up in 2024, hitting 3.2 million, this only reclaimed a fraction of the ground lost. All told, nearly 2 million households experienced a hit to their buying power in only two years.

In the analysis, affordability is defined as a scenario where a monthly mortgage payment — including taxes, insurance, maintenance and a 5% downpayment — takes up no more than 30% of a household’s income.

The size of a downpayment naturally alters the equation, though the report noted it does not change the broader trajectory. With a 20% downpayment, 30.7% of these renter households (4.8 million) were financially ready to buy in 2024, up from 30.3% in 2023. And in terms of 10% downpayment, 3.5 million households could afford a home, a 21.7% improvement from the prior year.

“The worst of the affordability shock appears to be over,” wrote Orphe Divounguy, author of the report and a senior economist on Zillow’s Economic Research team.

The sharp collapse in homeownership readiness was driven by two simultaneous economic forces: rapidly rising home values during the pandemic and a subsequent, aggressive spike in mortgage rates.

However, affordability still remains far from historical norms. Zillow reported the typical U.S. home value in 2024 remained nearly 49% higher than it was in 2019. Because prices remain elevated, home sales have stayed sluggish despite stabilized monthly costs. The report notes that this gap suggests the path back to typical housing activity involves hurdles beyond just securing an affordable monthly payment.

More recent metrics have shown conditions have continued to slowly improve. Zillow data from March 2026 shows that the typical U.S. mortgage payment was 4.4% lower than it was a year earlier. This easing in rates has effectively boosted the buying power of a median-income household by roughly $20,000.

While home sales have yet to fully rebound, these conditions may be an early indicator that the housing market is finally turning a corner, the company stated, while still cautioning this is more a stabilization than a surge, and uncertainty around energy costs could “dampen that outlook even further.”