Housing affordability remains a significant hurdle for many prospective homeowners in the United States, a challenge that persists despite fluctuations in mortgage rates. A recent analysis indicates that while some housing markets might see improved affordability with declining interest rates, others are so prohibitively expensive that even drastic rate reductions would do little to make homeownership accessible. Conversely, certain regions boast inherently lower housing costs, making them resilient to potential increases in mortgage rates without compromising affordability.
According to a comprehensive study by Zillow in 2025, the national average mortgage rate would need to decrease by more than four percentage points for a typical home to be considered affordable for a family earning the median income. This assessment factored in a 20% down payment and defined affordability as a monthly mortgage payment constituting less than 30% of the household's median income. Currently, the typical 30-year fixed-interest mortgage rate hovers around 6.18%.
Metropolitan hubs such as New York, Los Angeles, and Miami exemplify markets where escalating home values have created an affordability crisis so severe that even a 0% mortgage rate would not render them accessible to the average buyer. In New York, the median home value surpasses $800,000, while in Los Angeles, it approaches the $1 million mark. Similarly, high-priced cities like Boston and Seattle would require mortgage rates to fall below 1% to achieve a reasonable level of affordability. Other major cities, including Dallas, New Orleans, and Nashville, would necessitate a reduction of more than two percentage points in current rates to make housing affordable.
In stark contrast, several U.S. regions maintain lower housing costs, ensuring that homeownership remains within reach even if mortgage rates were to climb above 6.7%. For instance, Pittsburgh, Pennsylvania, features a more manageable average home price of approximately $231,518, significantly below the national average of $359,241. In this market, a home purchase would remain feasible for most individuals even if rates surged to 9%. Similarly, Birmingham, Alabama, with an average home value of $132,725, would allow the typical buyer to afford a home even if rates reached 7.62%. Detroit, boasting an average home value of $76,340, could sustain mortgage rates of up to 7.02%. Other cities like Buffalo, Indianapolis, and St. Louis also present affordable housing options, even if rates were to exceed 7%.