When it comes to how much Americans need to afford a typical house for sale, there’s a significant difference between that and what’s needed to a typical rental.
That’s according to new reports from Redfin, which said that Americans need to earn $111,252 per year to afford the home for sale, which is 46.3% more than the $76,020 they need to afford the typical rental.
That may seem like a major gap, but Redfin said it’s the smallest it has been in three years.
Redfin said that a year ago, a family would have needed $115,870 annually to afford the typical home listing, 55.6% more than the $74,464 needed for the typical rental. The website said that the gap peaked at 66.2% ($120,609 needed to buy, versus $72,572 needed to rent) in late 2023.
Redfin said it considers a home affordable if a buyer or renter spends no more than 30% of their income on their monthly housing payment and said this report focuses on December 2025.
That’s the most recent period for which data is available, and for comparable periods in past years.
The income for the typical home is still much higher than what the typical American earns, Redfin said.
Median Income Insufficient to Buy Typical Home
The website noted that the median U.S. household income is an estimated $86,185, roughly $25,000 less than the amount necessary to afford a home.
That gap is narrowing: the median income rose 4% from 2024 to 2025, while the income needed to afford a home fell. The gap between the income needed to buy a home and the typical American’s earnings was roughly $33,000 in 2024, $8,000 more than 2025’s gap.
As for renting, the typical household earns about $10,000 more than what it needs ($76,020) to afford the typical rental. So while the income required to afford a rental has ticked up, Redfin said that the typical American family can still afford a rental.
Redfin said the gap between the income needed to buy a home and the income needed to rent is shrinking because homebuying costs have declined on a year-over-year basis. Meanwhile rental costs have risen.
The website said that monthly housing costs are lower than they were a year ago.
The median home-sale price is $426,747, slightly higher than last year, but average mortgage rates are sitting around 6.1%, down from nearly 7% last year. That makes the median monthly mortgage payment around $2,675, down from roughly $2,800 a year ago. The annual income needed to buy a home dropped 4% year over year in December.
Rental Costs Up Over a Year Ago
Rental costs, meanwhile, are higher than they were a year ago. The median asking rent nationwide is $1,901, just $15 shy of August’s all-time high and up 2.1% year over year, Redfin said. That means the income needed to rent is also up 2.1% year over year.
With wages rising at a faster rate, 3.7% year over year, rental affordability has improved slightly, Redfin noted.
“Many Americans have been hesitant to jump from renting to buying due to high homeownership costs, but the recent drop in mortgage rates and rise in homebuyer negotiating power may help some take the leap,” said Grishma Bhattarai, a Redfin Economist. “We expect homebuying affordability to gradually improve in the coming year as mortgage rates stay closer to 6% than 7%, home-price growth loses steam and wages rise faster than housing costs.”
While rental costs are still rising on a year-over-year basis, they have started to decline month over month, Redfin said. Rental affordability, it said, could notably improve if current trends persist.
The post Here’s How Much More Income Homebuyers Need Than Renters first appeared on The MortgagePoint.
