First American data showed surprise gains in home-buying power across US markets
Housing affordability, long seen as locked in reverse for younger buyers, actually improved over the past year and compared more favorably with some earlier eras.
First American's February 2026 Real House Price Index (RHPI) showed an 11% annual gain in affordability and broad-based relief across major markets, even as home prices stayed near record highs.
“Importantly, the improvement was broad-based—each of the top 100 markets we track posted year-over-year gains in affordability, the first time that has occurred since October 2024,” First American chief economist Mark Fleming said.
The shift reflected all three familiar levers of affordability – mortgage rates, incomes and nominal prices.
Rates remained elevated by post‑financial crisis standards but were lower than a year earlier, while incomes rose and prices flattened or dipped in some markets, giving buyers more room to bid.
Broad-based gains, uneven memories
The RHPI showed real house prices fell 11% year over year in February, while consumer house‑buying power increased 12.6% over the same period.
Median household income rose 3.6% in the year and 51% since 2016, helping offset still‑high nominal prices.
Real, house‑buying‑power‑adjusted prices remained 12.3% below their 2006 housing‑boom peak, even as unadjusted prices sat 63.8% above that prior high.
Regionally, no state posted a year‑over‑year affordability deterioration, according to the RHPI.
Georgia led state‑level improvements with a 16% annual drop in its RHPI, followed by Florida (‑15.2%), Washington and Nevada (‑13.7% each) and South Carolina (‑12.2%).
At the metro level, Cape Coral (-16%), Seattle (-15.8%), Sarasota (-15.7%), Tampa (-15.3%), and Atlanta (-15%) recorded the sharpest year‑over‑year affordability gains.
“Affordability isn’t just about the price of the house, it’s about house-buying power, which in the last year increased over 12%,” Fleming said.
“Keeping that broader perspective in mind is key to understanding where the market stands today and how it compares to the past.”
Meanwhile, a new study released by Citizens continued to drive home the point that many homeowners believe that getting back into the market is not possible right now.
Only 13% of respondents said they felt buying a home was achievable in the current economic landscape. In the same survey, 44% of homeowners said renovation was likely their most realistic option over the next few years.
Fabien Thierry, head of home equity lending at Citizens, said the 13% statistic was the most staggering to him.
“The stunner for me was the 13% of those homeowners who said buying a new home feels achievable right now,” Thierry told Mortgage Professional America.
“That’s obviously low. That number captures the sentiment out there right now, with affordability, the elevated rates, and compressed inventory all converging. That’s what to me was the most surprising.”
Generational story looks different in real dollars
Fleming’s team translated past cycles into today’s dollars by adjusting for “house‑buying power” – the combined effect of rates and incomes – to compare how different generations experienced the market.
“While the median new-home price in 1981 was approximately $69,000, the house-buying-adjusted line shows that, under 1981 conditions, a home would feel like roughly $604,000 in today’s market—nearly 32 percent more than today’s median new-home price of approximately $414,000,” Fleming said.
“In other words, homes were cheaper in nominal terms in 1981, but less affordable when accounting for differences in house-buying power.”
Many baby boomers bought when mortgage rates peaked above 18%. Generation X navigated the mid‑2000s boom. Millennials largely came of age during the post‑crisis recovery and the pandemic run‑up.
Each cohort met a different mix of rates, income growth and price levels, shaping views on what “expensive” looked like.
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