Housing Affordability & Supply Rising Inventory, But for Whom? A Look at Inventory Gaps by Price Range and Income Level In 2025
Introduction
Housing affordability remains the central challenge defining the United States real estate landscape in 2025, despite a notable rise in overall inventory levels. According to a comprehensive analysis by the National Association of REALTORS® (NAR) and Realtor.com®, the housing market is experiencing a complex divergence where supply increases are not uniformly benefiting all income groups.
While total for-sale inventory has risen nearly 20 percent from the previous year, the distribution of these listings reveals persistent gaps that leave lower- and middle-income buyers significantly disadvantaged.This report examines the current state of housing affordability, highlighting how inventory growth has failed to translate into accessible opportunities for a large segment of American households.
The Paradox of Rising Inventory and Persistent Gaps
The narrative of the 2025 housing market is one of partial recovery mixed with structural imbalance. After years of historically low supply, driven largely by construction booms during the pandemic era when mortgage rates were at record lows, inventory is finally increasing across much of the country.
Regions such as Texas, Florida, and Tennessee have seen inventory recover to levels higher than pre-pandemic figures, and even Western markets like Colorado are witnessing a rebound in listings. Typically, an increase in inventory alleviates price pressures and improves housing affordability for buyers. However, a closer examination of the data indicates that this relief is unevenly distributed.
The core issue is not merely the quantity of homes available but their price points relative to buyer purchasing power. Many new listings are priced beyond the reach of a significant share of American households. Consequently, home sales in the lower and middle price tiers remain sluggish and volatile, while the high-end market continues to perform with greater stability.
High prices, elevated mortgage rates, and a lack of entry-level options continue to squeeze buyers, meaning that rising inventory does not automatically equate to improved housing affordability for those who need it most. To address this, it is essential to look beyond aggregate numbers and analyze what is available to buyers at specific income levels based on typical lending standards.
Understanding Housing Affordability by Income Level
To accurately assess housing affordability, the NAR and Realtor.com® analysis moves away from one-size-fits-all metrics. Instead, it evaluates the share of active listings that households at different income levels can actually afford. This approach provides a real-time, income-specific snapshot of market conditions as of March 2025. The findings reveal a stark disparity in access to homeownership opportunities across the income spectrum.
Middle-income buyers, defined here as households earning between $75,000 and $100,000 annually, have seen the greatest improvement in affordable supply among all groups. In March 2024, only 20.8 percent of listings were within reach for these households. By March 2025, that share rose modestly to 21.2 percent. While this represents progress, it remains far below pre-pandemic conditions. In 2019, buyers in this income bracket could afford nearly half, or 48.8 percent, of all active listings.
A balanced market would offer them access to approximately 48.1 percent of listings. The current shortfall suggests a missing inventory of nearly 416,000 listings priced at or below $255,000. This gap highlights that housing affordability for teachers, nurses, and skilled trades workers remains severely constrained.
Households earning $100,000 annually face a similar dynamic. They can now afford 37.1 percent of listings, a slight increase from 36.9 percent in March 2024. However, this is significantly lower than the 64.7 percent they could afford in 2019 and well below the 60.7 percent target for a balanced market.
This group is short nearly 364,000 listings priced under $340,000. Meanwhile, higher-income households earning $200,000 or more enjoy near-total access to the market, able to afford 80 percent to 100 percent of available listings. This contrast underscores that housing affordability is not a uniform crisis but a segmented one, where wealthier buyers face few barriers while others are systematically excluded.
The Deepening Crisis for Low-Income Buyers
While middle-income buyers see marginal gains, the situation for low-income households has deteriorated. Buyers earning less than $50,000 per year, who typically seek homes priced under $170,000, now face fewer affordable options than they did a year ago. In March 2025, a household earning $50,000 could only afford 8.7 percent of listings, down from 9.4 percent in the previous year.
Given that low-income households represent one-in-three U.S. households, a balanced market would require that they be able to afford one-in-three listings. The current reality is a profound failure of housing affordability for this demographic.
This growing affordability gap means that lower-income households are disproportionately priced out of the market. The data suggests that the country needs to add at least two affordable homes for middle-income buyers for every home listed above $680,000.
Without a significant boost in housing inventory at price points below $260,000, the path to homeownership will remain blocked for millions of Americans who are otherwise financially ready to buy. The lack of entry-level construction and the prevalence of higher-priced new builds exacerbate this issue, making housing affordability an urgent policy priority for local leaders and developers alike.
Regional Variations in Market Balance
Housing is not a single national market but thousands of local markets with distinct dynamics. To understand these variations, the report analyzes the 100 largest U.S. metro areas using an affordability distribution score. This score measures the difference between the actual share of listings households can afford and the share expected in a balanced market.
A score of 1 or greater indicates a balanced market, while a score lower than 1 indicates low housing affordability. Based on this metric, metros are grouped into three categories: those getting closer to balance, those stuck in the middle, and those falling further behind.
Thirty percent of the largest metro areas are getting closer to balance. These markets, including Akron, OH; St. Louis, MO; Youngstown, OH; and Pittsburgh, PA, are operating within conditions that closely match supply benchmarks. Other markets like Raleigh, NC; Des Moines, IA; and Columbus, OH have made substantial progress by adding more affordable listings. These areas demonstrate that improvement in housing affordability is achievable through increased inventory and strategic policy changes.
Forty-four percent of the largest metros are stuck in the middle. These markets, such as Seattle, WA, and Washington, DC, show moderate progress but still have significant affordability gaps. In these areas, households often need to earn more than $150,000 a year to afford half the homes on the market.
While some markets like Austin, TX, and Denver, CO, have increased the share of affordable listings by an average of 20 percentage points in just one year, they remain far from balanced. This group represents a critical turning point where intentional and sustained efforts are needed to improve housing affordability.
Twenty-six percent of the largest metros are falling further behind. Markets like Los Angeles, CA; San Diego, CA; New York, NY; and Spokane, WA, continue to have the most severe shortage of affordable listings. In Los Angeles, even households earning $200,000 a year struggle to find homes within recommended affordability guidelines, with only 30 percent of listings within their budget.
These gaps reflect decades of underbuilding, restrictive zoning laws, and high construction costs. The worsening housing affordability in these regions limits economic mobility and prevents essential workers from living near their jobs.
State-Level Trends and Policy Implications
At the state level, the analysis reveals significant variations in housing affordability and supply gaps. Iowa, Ohio, Indiana, Illinois, and West Virginia lead the nation in offering balanced housing conditions. In Iowa, for example, 48 percent of listings are affordable for a household earning $75,000.
Conversely, Montana, Idaho, California, Massachusetts, and Hawaii have the largest affordability gaps. In California and Massachusetts, a $75,000 household can afford fewer than 5 percent of homes, reflecting extreme pressure on housing affordability.
Some states are showing encouraging signs of progress. Delaware, Utah, Colorado, Florida, and Arizona experienced the most significant year-over-year gains in affordability scores. Florida added nearly 13,000 listings priced below $260,000 over the past year, contributing to improved housing affordability for moderate-income households.
Notably, the District of Columbia is the only market to have improved its affordability score compared to pre-pandemic levels, narrowing the gap for $75,000 earners from 32 percentage points in 2019 to 27 percentage points in 2025.
Conclusion
The 2025 housing market presents a nuanced picture of progress and persistent imbalance. While inventory is rising, housing affordability remains out of reach for many Americans, particularly those in the lower and middle-income brackets. The data clearly indicates that simply increasing the number of homes for sale is insufficient; the market must produce homes at price points that align with the financial realities of typical buyers.
Addressing the housing affordability crisis requires targeted strategies, including zoning reform, expanded down-payment assistance, and incentives for entry-level construction. As policymakers and developers navigate this turning point, prioritizing inclusive growth will be essential to ensuring that the benefits of rising inventory are shared equitably across all income levels. Only through such focused efforts can the goal of true housing affordability be realized for future generations.