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

• 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 - 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.

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.

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.

Contact Redfin Journalist Services:

Kenneth Applewhaite

[email protected]

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