Prices Are Down, But Buying A Home Is Still Out of Reach
Yes, home prices are rising more slowly. No, that doesn't mean homes are any easier to afford.
According to the S&P CoreLogic Case-Shiller Index, U.S. home prices rose 2.3% year-over-year, down from April's 2.7% gain. Month-over-month, prices ticked up just 0.4% before seasonal adjustment.
But even with that 'cooling,' the National Association of Realtors (NAR) says the median existing-home price hit a record high of $435,300 in June. Existing home sales fell 2.7% month-over-month, despite a modest bump in inventory.
Experts say these challenges are likely to persist through the year . Still, those willing to be flexible on location may find more budget-friendly options, especially in areas where local conditions now carry more weight than national housing trends.
In other words: homes still cost more, buyers are fewer and the rising price slowdown isn't helping most Americans unless they're willing to relocate to more affordable areas.
Here's the hard math: In Florida, the median income for a single earner is $65,801, according to the U.S. Census Bureau. Following the commonly recommended rule of spending no more than three times your annual income on a home, that would suggest buying a home priced around $197,400.
But the actual median sales price for a single-family home in Florida was $412,000 in June, according to Florida Realtors—more than six times the median income. Even though that price is down 3.5% from a year earlier, it's still far above what many Floridians can afford without taking on significant debt.
In California, a one-earner household brings in about $76,190, which should put their target home price near $228,570. Yet California's actual statewide median price for existing single‑family homes stood at $899,560 in June, according to the California Association of Realtors. That's nearly 12 times the median income—an affordability gap that even seasoned financial advisers would call unsustainable.
Financial advisers may still recommend the three-times guideline, but for many Americans in 2025, the numbers no longer add up, even before accounting for interest, taxes and insurance.
New York once again led all Case-Shiller cities with a 7.4% year-over-year gain in May. Chicago followed with 6.1%, and Detroit came in at 4.9%. These increases continue the trend of stronger growth in the Midwest and Northeast metro areas.
On the other end of the spectrum, Tampa's home prices dropped by 2.4%—the seventh straight month of annual declines for the city. Several Western cities also showed signs of weakening; San Francisco prices slipped by 0.6%. Los Angeles increased just 1.1%, while San Diego and Phoenix posted minimal gains of 0.4% and 0.9%, respectively.
Nationally, prices rose 2.3% from a year ago. But nearly all of that growth happened in the last six months. Monthly trends suggest fatigue is setting in. After seasonal adjustment, prices declined 0.3% in May. That was the third month in a row of adjusted price drops.
Even in cooling markets, buyers are not seeing much relief. The problem is not just the sale price of a home. It is the mortgage rate, the cost of insurance, the property taxes and the growing gap between wages and what homes actually cost.
As of mid-July, the average 30-year fixed mortgage rate sits at 6.74%, according to Freddie Mac. That's only slightly lower than this time last year, but still high enough to choke affordability.
If rates were to fall to 6%, NAR's Lawrence Yun estimates 160,000 more renters could become homeowners. But until then, rising home prices and elevated borrowing costs are working in tandem to keep the market locked up.
A $400,000 home with a 30-year mortgage at a 7% rate with a 20% down payment equals a monthly mortgage payment of nearly $2,130, excluding taxes and insurance. That payment alone can eat up 40% or more of a median earner's take-home pay in states like Arizona, Nevada or North Carolina.
Borrowers who comparison shop often get better deals than those who don't.
Lenders reserve the best rates for those with a credit score above 740. According to Experian, those with a 780 or higher get the best rates. Even a 20-point bump can cut your payment significantly.
Sellers in slower markets may offer credits, rate buydowns or pay closing costs just to get deals done.
FHA, VA and local agencies (like CalHFA or MassHousing) offer lower down payments, better rates, down payment assistance programs and even grants for qualified buyers.
If you're open to relocating, aim for places where paychecks and home prices actually make sense.
Prices aren't crashing—but they're not accelerating, either. This is a market of sharp elbows and thin margins. Here's where preparation beats timing, and compromise is king.
If you're waiting for a big drop, you might miss your window. But if you're strategic about your budget, your lender, and your location, you can still get in the door. Just maybe not your dream door. Yet.
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