Income needed to buy a house grew more in Philadelphia and Delco last year than anywhere else

The income needed to afford a typical home in Philadelphia and Delaware Counties increased by almost 6% in a year, the biggest jump across the 50 most populous metro areas.

In the region that Redfin defined as these two counties, homebuyers needed to make $82,447 per year to afford the $300,000 cost of the median-priced home sold last month, according to the online real estate brokerage. That needed income is a lot lower than most of the other 50 most populous regions, but the 6% increase is more than other regions experienced from the same time last year.

Rising home prices are hiking up the income needed to afford homes. In the Philadelphia-Delaware County region, the median home price increased by about 9% compared to the same time last year. That’s the second highest increase in Redfin’s analysis of 50 metros.

Of the five metros with the biggest increases in the income buyers needed to afford a typical home, four were on the East Coast. Density and constraints on housing supply help explain why.

The traditional definition of housing affordability is spending no more than 30% of income on monthly housing costs. In the Philadelphia-Delaware County region, the typical household makes about $9,700 less per year than it needed to afford the median-priced home sold last month. It would need to spend 34% of its income on housing.

» READ MORE: Philly-area renter households make $22,300 less than they need to afford a typical apartment for rent

Across the country, the income needed to buy a typical home decreased from August 2023 to August 2024, but the national average was higher than in Philadelphia and Delaware Counties.

A typical U.S. household needed annual income of $115,454 to afford the $433,101 cost of a median-priced home in August. That’s 1.4% less than the income needed at the same time last year.

It was the first annual drop since June 2020, when average mortgage rates were in the low 3% range. The recent drop in mortgage rates is why the income needed to afford a home for sale dropped nationally.

Despite that, the typical U.S. household makes $83,853 per year — 27% less than it needed to afford the typical home in August. It would need to spend 41% of its income on housing.

“Many house hunters are waiting to see if mortgage rates fall a lot further, but that probably won’t happen anytime soon,” Elijah de la Campa, a senior economist at Redfin, said in a statement. “That’s because the Fed’s latest interest rate cut and its plans for future cuts were highly anticipated, meaning they’re already mostly priced into mortgage rates.”

Buying a home is “unlikely to become markedly cheaper in the near future,” he said.

Redfin’s calculations assume buyers take out a mortgage, make a 15% down payment, and pay the average mortgage interest rate. Redfin used the traditional definition of housing affordability, and in its report, monthly housing payments include the mortgage principal, interest, property taxes, and insurance.

The last month in which the typical U.S. household could afford the typical home for sale was February 2021. The median household income was $69,021 — almost 6% more than needed.