Home prices rise 0.9% as affordability crisis deepens

Home prices in 20 major U.S. metro areas rose 0.9 percent in April from a year earlier, the S&P CoreLogic Case-Shiller index is expected to show Tuesday, even as a deepening affordability crisis locks out first-time buyers.

"Despite real and persistent challenges in the market, buyers and owners are increasingly optimistic, and many are starting to move forward rather than waiting on the sidelines," Matt Vernon, head of consumer lending at Bank of America, said in a statement.

The Mortgage Bankers Association forecasts price growth in the FHFA House Price Index will slow to 0.6 percent by year-end and remain below 1 percent through 2027. Nearly a third of prospective buyers expressed greater confidence in their ability to purchase a home this year, up from 27 percent in 2025, according to a Bank of America Institute survey conducted from April 13 to May 10.

The modest price gains mask a structural divide: Homeownership is increasingly determined by inheritance rather than income. The median first-time buyer is now 40 years old, and first-time buyers accounted for just 21 percent of purchases — an all-time low, according to the Harvard Joint Center for Housing Studies' 2026 State of the Nation's Housing report.

Affordability Gap Widens to Historic Levels

The median existing single-family home sold for nearly five times the median household income in 2025, up from a ratio of 3.2 times averaged throughout the 1990s, Harvard found. Monthly mortgage payments on that median-priced home, at roughly $2,420 assuming a modest down payment and a 30-year fixed rate, were nearly double their level at the end of 2020. Only 16 percent of renter households earned the $120,800 minimum required to afford that home.

Listings affordable to households earning $75,000 or less fell to 23 percent of national inventory in March 2026, down from 49 percent in 2019, according to the National Association of Realtors and Realtor.com. The homeownership rate for households under 35 dropped to 37 percent, down from 39 percent in 2022, while the Black-white homeownership gap widened to 28.7 percentage points — exceeding the gap recorded in 1995.

Equity Concentration Favors the Already-Housed

Aggregate homeowner equity reached $34 trillion in the fourth quarter of 2025, up 88 percent and what Harvard called an "astounding" $16 trillion since 2019. The average homeowner held about $295,000 in home equity. A May 2026 study by the National Bureau of Economic Research found that housing capital is substantially more persistent across generations than earnings, with less than half of that persistence explained by what children earn.

The divergence is visible at the local level. Seattle-area home prices fell 1 percent in March, the third straight monthly drop, and stood 2.5 percent below year-ago levels, the S&P CoreLogic Case-Shiller index showed. Statewide housing permits in Washington jumped to a seasonally adjusted annual rate of 53,000 units in April, driven by 36,900 multi-family units, though the state's economic forecast council does not expect that pace to hold.

The housing market is evolving into a mechanism that compounds wealth upward and forecloses it downward across generations. With the federal government scaling back rental assistance — reaching only about one in four very low-income renter households — and fair housing enforcement reduced, the structural barriers to homeownership are likely to persist even if price growth continues to moderate.

This article is for informational purposes only and does not constitute investment advice.