Housing’s Next Rebound Depends on Paychecks

Housing affordability has improved in some corners of America, but the national market remains far from normal.

The Atlanta Federal Reserve tracks the monthly cost of a median-priced home as a share of median household income. That burden reached 44% at the mid-2000s housing peak, fell to 25% after the 2008 financial crash, and remained mostly below 30% from 2013 through 2020.

That changed when mortgage rates climbed and home prices kept rising. The national payment burden crossed 30% in mid-2021 and peaked at 45.3% in October 2023. It has since eased to about 42%, still well above the 30% affordability line often used by housing analysts.

But the national figure hides a wide range of local conditions. Three-quarters of the roughly 800 markets tracked by the Atlanta Fed are below the national burden, and the median local market sits at 34.6%. In 19 states, the typical market is at or below one-third of income, mostly in the Midwest and South.

Affordability alone is not enough. To find markets where housing costs are lower and local economies are still growing, AMG compared the more affordable states with Bureau of Labor Statistics payroll data. National payrolls grew just 0.2% in 2026 through July, setting a low but useful benchmark.

A handful of states stand out. In September, Minnesota had a median market burden of 32.1% and payroll growth of 1.4%, the fastest in the country. Missouri and Alabama were cheaper, at 29.2% and 29.6%, with payroll growth of 1% and 0.8%. South Carolina and Louisiana were slightly less affordable, at 33.9%, but both posted 1.3% payroll growth.

The cheapest states are not necessarily the strongest housing markets. Illinois, Iowa and West Virginia had the lowest cost burdens, but payrolls were flat or down. West Virginia’s payment burden was 31.8%, yet payrolls fell 1.1%.

The result is a more uneven housing map. If mortgage rates fall, the first lift may come in places where homes remain relatively affordable and employers are still adding jobs. For buyers, builders and investors, the question is no longer where housing is cheapest. It is where affordability and growth still overlap.