Redfin Report: U.S. Housing Costs Could Return to "Normal" Within 5 Years

The analysis defines normal housing costs against August 2018 income ratios, which does not necessarily mean affordability in every metro.

Rhea-AI Summary

Rocket (RKT)-powered brokerage Redfin published a housing-cost analysis exploring when mortgage payments could return to historical income levels. Redfin estimates a hypothetical national return to August 2018 affordability levels by November 2031 with 6% mortgage rates and 2.1% annual home-price growth. With flat prices and 7.5% rates, the modeled date is April 2032; with flat prices and 6% rates, it is February 2029.

“Normal” means restoring the mortgage-payment-to-income ratio to its August 2018 level, nationally 30%, rather than making every metro affordable. At 7.5% rates, current local price trends and projected income growth imply October 2027 for San Jose, February 2028 for Austin and April 2028 for Oakland. About half the analyzed metros could take at least a decade with rates between 6% and 8% and current price growth continuing. These scenarios are hypothetical, not predictions.

Key Figures

Return-to-normal timeline: Within 5 years Return-to-normal timeline: Within about 6 years Return-to-normal timeline: 10 years or more +1 more

Return-to-normal timeline

Within 5 years

Hypothetical scenario: mortgage rates at 6% and home-price growth at 2.1%

Return-to-normal timeline

Within about 6 years

Hypothetical scenario: mortgage rates about 7.5% and home-price growth flattened

Return-to-normal timeline

10 years or more

Hypothetical scenario: rates between 7% and 8% and home-price growth at 2.1%

Affordability benchmark

30%

National median monthly mortgage-payment-to-income ratio in August 2018

Key Terms

mortgage-payment-to-income ratio

1 terms

mortgage-payment-to-income ratio financial

"housing costs, defined as the mortgage-payment-to-income ratio"

The mortgage-payment-to-income ratio measures the size of a borrower's recurring mortgage payment relative to their regular income, usually expressed as a percentage. It is calculated by dividing the monthly mortgage payment (commonly including principal, interest, property taxes and homeowners insurance — sometimes abbreviated PITI) by the borrower’s monthly income (typically gross, pre-tax income); lenders may use slightly different inclusions or use net income, so reported values can vary. The ratio is a simple affordability gauge used in lending decisions and underwriting rules, with lower percentages indicating a smaller share of income devoted to the mortgage and higher percentages indicating greater strain on the borrower’s cash flow.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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• The timeline varies widely depending on how rates and prices evolve—and it varies even more from metro to metro
• Costs are closest to returning to normal in San Jose, Oakland, Seattle, Portland and Austin
• Housing costs could take at least a decade to return to normal in half of the metros in Redfin's analysis

SEATTLE, Oct. 8, 2026 /PRNewswire/ -- Housing costs could hypothetically return to "normal" within the next five years if mortgage rates drop to 6% and home-price growth holds steady around 2.1%. That's according to a new report from Redfin, the real estate brokerage powered by Rocket. Alternatively, housing costs could return to normal in just a slightly longer timeline—within about six years—if mortgage rates stay where they are today, about 7.5%, and home-price growth flattens.

If mortgage rates were to drop to the lowest bounds of Redfin's expectations—6%—and price growth were to flatten, housing costs could return to normal by February 2029, which is just over two years from now. That's unlikely, but possible.

On the flip side, it could take 10 years or more for costs to return to normal if mortgage rates remain stubbornly high, between 7% and 8%, and prices keep growing at their current annual rate of 2.1%. That's also unlikely but possible: If rates stay that high, home-price growth would be difficult to sustain without a further decline in home sales.

When Will U.S. Housing Costs Return to "Normal"?
	Current price growth (2.1% year over year)	If price growth were to flatten (0%)	If prices were to decline (-2% year over year)
6 %	November 2031	February  2029	May  2028
6.5 %	March 2034	March 2030	January  2029
7 %	July 2036	April 2031	October  2029
7.25 %	In 10+ Years	October  2031	February  2030
7.5 %	In 10+ Years	April  2032	June  2030
8 %	In 10+ Years	May  2033	February  2031

How Redfin Defines "Normal"—and How It Varies Based On Where You Live

Redfin's analysis explores hypothetical scenarios for U.S. home-price growth, mortgage rates and income levels, and uses those scenarios to estimate when housing costs could return to "normal." For this report, "normal" means housing costs, defined as the mortgage-payment-to-income ratio, have returned to August 2018 levels. At that time, the national median monthly mortgage payment-to-income ratio was 30%—meaning the typical U.S. homebuyer would need to spend 30% of their household income on their monthly mortgage payment. This 30% threshold is a widely recognized benchmark for housing affordability.

But at the metro level, "normal" does not necessarily mean "affordable;" rather, "normal" means the metro has returned to its 2018 level of home prices relative to incomes, even if the median home in some expensive metros remains out of reach for the typical household. Please see the end of this report for more details on methodology.

The analysis is theoretical, and the hypothetical scenarios should not be read as predictions. But they do represent real trends in home-price growth, mortgage rates and income growth, and any of them are possible.

"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 Redfin Senior Economist Asad Khan. "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. For buyers and sellers, that means the best time to make a move is when it makes sense for your finances and your life. If you're a buyer who needs more time to save for a down payment, take more time. If you're a buyer who has the means to buy at current costs and you find your dream home, don't let today's rates stop you."

Housing Costs Are Almost Back to "Normal" in Parts of the West Coast

The timeline for return to normalcy varies by region.

Housing costs are closest to returning to normal in San Jose, CA. San Jose's declining home prices (-3.2% year over year), combined with the fact that Redfin expects strong future wage growth (6.5%), mean housing costs could return to normal in just over one year—even with today's 7.5% mortgage rates. If rates were to fall to 6.5%, San Jose's housing costs could return to normal by the end of this year. That's largely due to stronger-than-average income growth, thanks to the Bay Area's tech-fueled economy.

After San Jose, Austin, TX is the closest to returning to normal housing costs. With 7.5% mortgage rates, costs could return to normal by early 2028. That's because home prices are down 2.9% year over year in Austin, while Redfin projects wages to post annual growth of 4.9%. Prices have fallen in Austin because of slow homebuying demand combined with lots of supply, which is largely the result of pandemic-era overbuilding.

Next comes another Bay Area metro, Oakland, where housing costs could return to normal by spring 2028 with 7.5% rates.

The 10 Housing Markets That Could Return to Normal Soonest Defined by August 2018 levels, based on annual home sale price growth and mortgage rate scenarios. Assuming current local price growth, and projected income growth based on historical trends.
U.S. metro area	Current Price Growth, YoY Change	Projected Annual Income Growth	8 %	7.5 %	7.25 %	7 %	6.5 %	6 %
San Jose, CA	-3.2 %	6.5 %	March 2028	October 2027	July 2027	April 2027	November 2026	Now
Austin, TX	-2.9 %	4.9 %	August 2028	February 2028	December 2027	September 2027	March 2027	Now
Oakland, CA	-0.3 %	6.5 %	November 2028	April 2028	December 2027	September 2027	January 2027	Now
Seattle, WA	-2.9 %	5.8 %	December 2029	June 2029	April 2029	January 2029	July 2028	January 2028
Portland, OR	-0.1 %	5.6 %	November 2030	February 2030	October 2029	June 2029	September 2028	December 2027
San Antonio, TX	-0.8 %	3.2 %	January 2032	January 2031	July 2030	January 2030	January 2029	January 2028
Sacramento, CA	0 %	4.9 %	February 2032	April 2031	November 2030	June 2030	July 2029	September 2028
Denver, CO	0.7 %	4.9 %	June  2033	June 2032	November 2031	May 2031	April 2030	March 2029
Los Angeles, CA	0.7 %	4.9 %	June  2033	June 2032	December 2031	June 2031	June 2030	May 2029
Fort Worth, TX	-0.9 %	3.5 %	December 2033	February 2033	September 2033	April 2032	May 2031	July 2030

It Could Take 10+ Years For Housing Costs to Get Back to "Normal" in the Northeast and Midwest

In about half of the metros Redfin analyzed, it could take at least a decade for housing costs to normalize. Many of them are in the Northeast or Midwest, including Boston, the New York City area, Chicago and Milwaukee—and many are places where home prices are growing faster than the national average.

Price growth is strong in most of these places because they're generally more competitive markets than the West Coast or the Sun Belt. Nassau County is the strongest seller's market in the nation, for instance, and Chicago is hotter than most other U.S. metros.

Here are all the metros it could take at least a decade for housing costs to normalize, if mortgage rates stay between 6% and 8% and price growth continues at its current pace:

• Anaheim, CA
• Baltimore, MD
• Chicago, IL
• Cincinnati, OH
• Cleveland, OH
• Columbus, OH
• Detroit, MI
• Fort Lauderdale, FL
• Indianapolis, IN
• Jacksonville, FL
• Kansas City, MO
• Milwaukee, WI
• Montgomery County, PA
• Nassau County, NY
• New Brunswick, NJ
• Newark, NJ
• New York, NY
• Philadelphia, PA
• Providence, RI
• St. Louis, MO
• Tampa, FL
• Virginia Beach, VA
• Warren, MI
• West Palm Beach, FL

To view the full report, including interactive charts and methodology, please visit:
https://www.redfin.com/news/return-to-normal-housing-costs

About Redfin 
Redfin is a technology-driven real estate company with the country's most-visited real estate brokerage website. As part of Rocket Companies (NYSE: RKT), Redfin is creating an integrated homeownership platform from search to close to make the dream of homeownership more affordable and accessible for everyone. Redfin's clients can see homes first with on-demand tours, easily apply for a home loan with Rocket Mortgage, and save thousands in fees while working with a top local agent.

You can find more information about Redfin and get the latest housing market data and research at https://www.redfin.com/news. For more information about Rocket Companies, visit https://www.rocketcompanies.com.

 

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SOURCE Redfin

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

When could U.S. housing costs return to normal in Redfin's analysis?

Housing costs could return to August 2018 levels by November 2031 if mortgage rates fall to 6% and annual home-price growth continues at 2.1%. With flat prices and 6% rates, the modeled date is February 2029. These are hypothetical scenarios, not predictions.

Which housing markets could return to normal soonest in Redfin's analysis?

San Jose is closest to returning to its August 2018 mortgage-payment-to-income ratio, followed by Austin and Oakland. With 7.5% mortgage rates, current local price growth and projected income growth, their modeled dates are October 2027, February 2028 and April 2028, respectively.