Housing affordability improved for the sixth straight month in March, but rising rates are already eroding the gains that buyers were counting on
Housing affordability across the United States posted its sixth consecutive annual improvement in March 2026, but the momentum is already fading and the spring home-buying season may be weaker for it.
According to the First American Data & Analytics Real House Price Index (RHPI), affordability improved 7.8% on an annual basis in March, driven by lower mortgage rates and household income growth that outpaced flat nominal house prices. However, that progress was quickly undermined when rates reversed course.
The average 30-year fixed mortgage rate climbed from 6.05% in February — its lowest level since 2022 — to 6.18% in March, and continued rising through April and into May, with Freddie Mac reporting the 30-year fixed rate at 6.51% as of May 21, 2026.
The timing was particularly costly. Had rates held at February's level through March, national affordability would have improved by roughly 9% year over year rather than 7.8%, according to First American chief economist Mark Fleming.
"Affordability is moving in the right direction nationally — just more slowly, and less evenly, than many expected only a few months ago," Fleming said.
Single-family home prices in the United States rose 1.7% year over year in the first quarter of 2026, according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI).https://t.co/lVjUUbWPyI
— Mortgage Professional America Magazine (@MPAMagazineUS) May 26, 2026
Rate sensitivity underscores a fragile recovery
A 25-basis-point increase, from 6.05% to around 6.30%, reduces consumer house-buying power by approximately $11,000, assuming income stays flat, according to the First American analysis.
That figure captures why rate volatility carries outsized consequences for already-stretched borrowers.
Andy Walden, head of mortgage and housing market research at ICE, noted that 30-year rates rising roughly 40 basis points since early-year lows pulled about 4% of buying power back out of the market, reshaping conditions from those early-year peaks. CMP
That headwind is landing at the worst possible moment. Inventory has been rebuilding and buyer interest had begun to firm, only to run into renewed rate pressure tied to bond market volatility and geopolitical uncertainty.
Local markets tell a more uneven story
The national picture masks significant divergence at the market level.
In February, affordability improved annually across all 100 tracked markets for the first time since October 2024. By March, that sweep narrowed: First American's RHPI showed affordability gains spreading across US markets, but nine of the top 100 saw conditions worsen.
Hartford, Conn., New Haven, Conn., Albany, N.Y., Poughkeepsie, N.Y., and Allentown, Pa. recorded the steepest declines, where continued nominal house price growth offset the benefit of lower rates compared to a year earlier.
Read more: Affordability improves across all top 100 US housing markets
Meanwhile, the strongest gains were concentrated in the South and West, where pandemic-era price appreciation has cooled most sharply.
In Cape Coral, Fla., nominal house prices declined approximately 5% annually, producing a significant affordability improvement despite muted income growth of 0.3%.
Seattle saw a different mix: more modest price declines of around 2%, combined with 7% household income growth, delivered a comparable affordability boost through a different route.
Real house prices nationally remain 26.6% above January 2000 levels on an inflation-adjusted basis, though they are 10.4% below their 2006 housing boom peak when adjusted for house-buying power.
Consumer house-buying power increased 8.9% year over year in March, even as it fell 1.1% on a month-over-month basis.
Median household income has risen 3.7% since March 2025 and 51.1% since March 2016, according to First American's data.
The only state to record a year-over-year increase in the RHPI in March was Vermont, up 0.1%. The five states with the sharpest annual declines were Georgia (-13.5%), Florida (-11.6%), Washington (-10.8%), Nevada (-10.0%), and Texas (-8.7%).
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