Homes Could Be Affordable Again in 20 Major U.S. Cities by the End of 2026
A rare affordability rebound is taking shape across the housing market—and it’s being driven by a three-part shift buyers have been waiting for.
By the end of 2026, buying a typical home is expected to be affordable in 20 of the 50 largest U.S. metro areas, according to new projections from Zillow. That would be the highest number of affordable major markets since 2022.
The reason: slower home price growth, falling mortgage rates, and rising household incomes are finally moving in the same direction.
Why Housing Affordability Is Improving Now
Housing affordability took a historic hit after 2020, when home prices surged, and mortgage rates doubled in 2022. At the worst point in October 2023, a typical mortgage payment required 38.2% of the median household income, far above the commonly accepted affordability threshold.
Today, that figure has improved to 32.6%, the best level since mid-2022. Zillow expects it to fall further to 31.8% by year’s end, pushing more metro areas back into affordable territory.
Zillow defines a home as “affordable” when the monthly mortgage payment, including taxes and insurance, uses no more than 30% of median household income.
These Cities Are Becoming Affordable Again
Several large metros are projected to cross back under that 30% threshold in 2026, including:
- Chicago
- Atlanta
- Raleigh
Nationwide, affordability is expected to improve in 49 of the 50 largest metro areas.
The lone exception: Hartford, Connecticut, where strong demand and fast price growth are expected to push costs higher. Zillow recently named Hartford the hottest housing market of 2026.
Monthly Mortgage Costs Are Already Falling
Buyers are already seeing relief. With mortgage rates averaging 6.2% in December and a 20% down payment, the monthly cost of a typical U.S. home is now about $2,337. That’s:
- $92 less per month than a year ago
- $177 less than the peak in October 2023
If current trends continue, Zillow projects that payment will rise only slightly to around $2,358 by the end of 2026, a sign of stabilization rather than renewed pressure.
What’s Driving the Shift
Zillow’s outlook is based on three key assumptions:
- Mortgage rates ease toward 6% by the end of the year
- Home values grow modestly, up about 1.9% nationally
- Household incomes rise roughly 3.3%, helping buyers absorb costs
Importantly, this affordability improvement is not coming from falling home prices. Zillow expects prices to rise in 41 of the 50 largest metro areas, just at a much slower pace than in recent years.
The Big Hurdle That Still Remains: Down Payments
Even with improved monthly affordability, upfront costs remain a challenge.
The typical U.S. home is valued at about $359,000, which means a 20% down payment is nearly $72,000. By the end of 2026, that could climb above $73,000.
Many buyers put less down, but smaller down payments usually lead to higher monthly costs and can affect affordability calculations.
What This Means for Buyers Right Now
For would-be buyers who’ve been priced out in recent years, 2026 could mark a turning point, especially in Midwest and Southern metros where incomes stretch further.
The key takeaway: housing affordability isn’t fully “fixed,” but it’s clearly moving in the right direction. After years of relentless pressure, the market is finally giving buyers some breathing room.
For many households, that could be the difference between continuing to wait and finally being able to buy.