Good news for America’s 45 million renter households: Thanks to lower mortgage rates and, secondarily, price growth that’s now undershooting the pace of wage gains for many workers, the gap between the median annual income and the per-year earnings required to comfortably afford the typical house is shrinking.

Right off the bat, you should see a problem. Namely, there shouldn’t be a disparity, let alone a large one, between the typical household income and the income needed to afford the typical home.

If there’s a disparity between those two figures, it means homes are a luxury item. The wider the disparity, the more of a luxury homes are. Or, put differently, as the gap between the median income and the income necessary to afford the typical home widens, the “American dream” becomes the American pipe dream.

As the figure below, which utilizes Redfin data, shows, there were eight months post-pandemic during which Americans needed to earn $120,000 or more to afford the median home. Again: That’s problematic because the median annual income was between $80,000 and $83,000 over that period.

In December, the threshold — which is calculated using the standard 30% ratio — fell 4% YoY, as it did the prior month. Headed into 2026, Americans needed to earn $111,252 per year to afford the typical for-sale house at the prevailing mortgage rate.

“While housing remains historically expensive, the trajectory is finally starting to reverse, with the door to buying a home opening a bit wider rather than closing tighter,” Redfin’s head of economics research, Chen Zhao, said, in a piece with Dana Anderson.

That’s great, but… well, note from the chart how truly dramatic (and, if you’re still struggling to get your foot in Chen’s barely-open door, traumatic) the post-pandemic shift really was on this particular metric.

In February of 2020 — and for all of 2019 — Americans needed to earn about $60,000 to afford the median home, which is to say between $5,000 and $8,000 less than the median annual income at the time. At the most onerous post-pandemic levels, that threshold had more than doubled to $122,000. Even now, after falling $10,000 from the peak, it represents a premium of $25,000 to the typical household annual pay.

Meanwhile, the latest consumer credit report from the NY Fed showed the rate of transition into early delinquency for mortgages moved up to the highest since Q4 of 2015.

As the figure shows, so far this is just a normalization following a decline to record-low delinquencies during 2021. But the uptick grabbed a few headlines this week.

“It is important to note that overall, mortgages continue to perform well by historical standards and have risen recently only after having reached artificially low levels during the pandemic due to the stimulus and forbearances available to borrowers at that time,” NY Fed researchers remarked, on the way to cautioning that “in lower-income areas and in areas experiencing worsening labor market conditions, we are seeing mortgage delinquencies grow at a fast pace.”

Commenting further in the Redfin piece, Chen noted that although affordability’s improving at the margins, Americans are now “contending with other obstacles on the road to buying a home, like nerves about layoffs and economic uncertainty.”