When will US housing costs return to normal?

For many brokers, the question isn’t whether housing affordability will recover – it’s when. A new report from Redfin, the real estate brokerage powered by Rocket, puts a timeline on it: under the right conditions, US housing costs could realign with 2018 norms within five years.

The report measures “normal” as a return to the August 2018 national median mortgage-payment-to-income ratio – that is, the share of household income required to cover a monthly mortgage payment – which sat at 30% at the time.

That 30% threshold is widely used as the standard housing affordability benchmark. Since then, housing affordability eroded sharply across the US market as rate increases and price appreciation compounded cost burdens for buyers and originators alike.

Redfin modeled six scenarios by varying mortgage rates and home-price trajectories. The most favorable path – rates falling to 6% with prices declining 2% annually – could deliver normalization as early as May 2028.

At 6% rates with flat prices, the target date shifts to February 2029. Should high mortgage rates persist above 7% alongside 2.1% annual price growth, normalization could take more than a decade.

The scenarios are theoretical rather than predictive, but are grounded in real price, rate and income trends.

“Many house hunters feel stuck between two bad options: Stretch themselves to buy at today’s rates, or wait for lower rates only to see prices climb further out of reach,” said Asad Khan, senior economist at Redfin.

“But prospective buyers shouldn’t get hung up on timing the market. These hypothetical scenarios should give would-be buyers and sellers some hope that the market can normalize with only modest changes in rates or prices.”

A new analysis from Zillow found that newly built homes are selling for a lower median price per square foot than existing homes nationwide, driven largely by increased inventory and builder incentives in key Sun Belt markets. https://t.co/p9BiScqJaw

— Mortgage Professional America Magazine (@MPAMagazineUS) September 30, 2026

West Coast and Sun Belt: closest to housing cost recovery

San Jose, California, is the metro nearest to its 2018 cost norms, with home prices down 3.2% year over year and projected wage growth of 6.5%, driven by the Bay Area’s technology sector.

At the report’s 7.5% rate scenario, normalization in San Jose could arrive by October 2027.

Austin, Texas, and Oakland, California, follow closely, with Seattle, Washington, and Portland, Oregon, rounding out the top five.

All five share a combination of price softening and above-average income growth that most interior markets cannot currently match.

Northeast and Midwest face a decade-long affordability wait

Roughly half the metros Redfin analyzed could take 10 or more years to normalize. The Northeast and Midwest – New York, Chicago, Boston and Philadelphia among them – face the steepest path, with above-average price growth outpacing any expected rate relief.

Samantha Shelton, mortgage broker and president at Align Lending, previously told Mortgage Professional America that timing the market is “the biggest myth in real estate.” Redfin’s analysis reinforces that view. In these markets, local income and inventory dynamics matter far more than rate timing alone.

Source: Redfin (powered by Rocket). "Closest to normal" dates based on the 7.5% mortgage rate scenario with current local price growth. "Normal" = August 2018 mortgage-payment-to-income ratio (30% of household income). Decade-long markets listed in order of regional grouping; Redfin provides no internal ranking within that cohort. Scenarios are theoretical, not forecasts.

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