U.S. Incomes Rose, but Homes Became Less Affordable

American households earned more in 2025, but the improvement did not keep pace with housing costs. The national median income reached $84,780, a 3.8% increase from the previous year. Earnings rose in every state except Alaska, with Rhode Island, Virginia and Wyoming recording the largest gains. After adjusting for inflation, however, only 37 states posted increases.

Higher borrowing costs widened the gap between pay and home prices. A household earning the national median was about $31,136 short of the income needed for a $419,250 home, based on a 7.32% mortgage rate, 10% down and estimated taxes and insurance. That gap was about 24% in 2024. The analysis found that median earners in every state and Washington, DC, would face housing costs above the recommended share of income.

Iowa remained the closest state to affordability. Its typical household earned $78,483, while the required income for a $284,900 home was $2,287 higher. Montana ranked last: households earned $77,099, nearly 56% below the amount needed for a $635,000 home. The Midwest continued to offer the narrowest gaps, while expensive coastal and Western markets remained the most difficult.