Home shoppers have more buying power heading into spring 

With mortgage rates continuing to trend downward and wage growth outpacing inflation, several recent industry reports indicate that buyers will be better able to afford a home this spring — though it remains tougher to do so now than before the Covid-19 pandemic.

Zillow estimates that a median-income U.S. household can now afford a $331,483 home with a 20% down payment. That's a more than $30,000 increase in buying power compared to a year ago, according to Zillow's analysis.

In a separate study, First American estimates that affordability increased by about 9% in late 2025 compared to a year earlier, boosting homebuying power by around $36,600.

"The improvement was broad-based, with all 50 states and 48 of the top 50 markets posting annual gains," said Mark Fleming, chief economist at First American. "While affordability remains below its pre-pandemic five-year average, the recent improvement is a welcome respite for home buyers."

Despite improvements, affordability gap remains: But with the median price for existing homes sold in January at $396,800 and new home prices at $414,400 in December, many buyers are still facing an affordability gap.

However, buyers may have some negotiating power when the time comes to make an offer. According to a Redfin estimate, the U.S. market had 44% more sellers than buyers in January — and at 1.36 million, the number of buyers has hit its lowest point since Redfin began tracking this data 13 years ago. 

While intense winter storms have kept some buyers from venturing out, high home prices and economic uncertainty are also contributing to the low number of buyers in the market. But as the weather begins to warm, new buyers may enter the picture — and new listings may also spike, as traditionally happens during the spring.

More buying power, more options: While improved buying power hasn't yet been enough to return the market to pre-pandemic affordability levels, it could for some be the difference between settling for one home and choosing another, noted Kara Ng, a senior economist at Zillow.

"That doesn't suddenly make this market affordable for everyone, but it does crack open doors that had firmly shut when rates peaked," Ng said.

Mortgage rates broke a psychological barrier earlier this week, with 30-year rates edging below the 6% mark (coming in at 5.99% on Feb. 23, according to Mortgage News Daily). 

The downward trend in mortgage rates is bringing the biggest boost in buying power to expensive markets. San Jose, California, leads the way, with $74,000 in buying power gained compared to a year ago, according to Zillow's Feb. 23 report. Not far behind are San Francisco (with a $56,115 year-over-year increase) and Washington, D.C. (with a $48,881 boost).

Inventory also factors into the affordability equation. First American economists estimate that affordability in Austin, Texas, has improved 12% year-over-year because inventory is around 50% above the city's pre-pandemic norm. Similar patterns are appearing inTampa, Florida, and Dallas, First American's report noted.