— Explainer
Housing affordability and rates.
The median U.S. house, the median U.S. income, and the 30-year fixed rate. One chart of what their ratio has done since 2000, and three live inputs you can move yourself.
— Affordability, right now
The median house in the U.S. costs $405,300. The median household earns $83,730. The 30-year mortgage is at 6.37%. Those three numbers, one division, and you get the affordability index. 100 means the median household can just barely qualify for the median house at a 28% debt-to-income ratio. Below 100 means they cannot.
The index does most of its moving on the rate line. Prices are sticky because nobody wants to mark their house down. Incomes grind higher slowly. But the monthly payment on a 30-year loan is extremely sensitive to the coupon on that loan, and the coupon is reset weekly by the bond market. Move the rate slider and you can watch what a point of 10-year Treasury yield actually does to your buying power.
Monthly payment
$2,022
Principal & interest on a $324K loan at 6.37% for 30 years.
Income required
$86,648
Annual gross income that qualifies this house at a 28% DTI. That is 103% of median.
Down payment
$81,060
20% of $405K, saved up front. The number nobody has lying around.
vs long-run average
111.4
13% below the long-run average of 111
— This home requires 103% of median income
A 28% front-end debt-to-income ratio is the standard front door for a conforming mortgage. At $405,300 and 6.37%, you need $86,648 to walk through it. The median household earns $83,730. The ratio between those two numbers is the thing people mean, imprecisely, when they say housing is unaffordable.
The math is arithmetic. The problem is that two of the three inputs, price and rate, are set in markets that do not care what the median household earns. The third, income, grinds higher by inches. When the ratio blows out, it is always the two numerator inputs doing the work. Right now, the rate is the one doing most of it.
— Affordability since 2000
The index, drawn out
2000-Q1 through 2025-Q4. Index = (median income × 0.28 × 12) ÷ annual P&I on a 20%-down mortgage × 100. Red band is the region where the median household cannot qualify.
— Where the rate actually comes from
The 30-year mortgage rate you see quoted is not set by the Fed. It is set by the bond market. The building block is the 10-year Treasury yield, and on top of that lenders stack a spread for credit risk, prepayment risk, and the operational cost of servicing a loan. That spread is normally 150 to 200 basis points. It has been much wider than normal since 2022, which is a separate story.
What moves the 10-year moves your mortgage. Treasury issuance, inflation expectations, and the market's guess at where the Fed will be in three years all land on the same line. Whenever you read that yields are up 20 basis points on the day, that is roughly a $50 a month swing on the median house at 20% down. The mechanics are laid out in how mortgage rates are set.
If you want to stress-test your own number rather than the median, the mortgage calculator takes a price, a down payment, a rate, and a term, and prints the monthly payment and the total interest over the life of the loan. Different house, same math.
— FAQ
Housing and rates, answered.
— Free · Daily
Get the briefing in your inbox.
One plain-language market briefing after the close, every market day. Free forever.