House price to income ratio index in the U.S. 2012-2024, per quarter

The house price to income ratio in the U.S. increased in 2023, after falling slightly in the second half of 2022. The ratio measures the development of housing affordability and is calculated by dividing the nominal house price by the nominal disposable income per head, with 2015 set as a base year when the index amounted to 100. In the third quarter of 2024, the index score amounted to 130.3, which means that house price growth has outpaced income growth by over 30 percent since 2015.

Stagnant wages

Average annual real wages steadily rose until 2014 but have since remained stagnant. However, single-family house prices have continued to increase. This disparity has resulted in decreased housing affordability.

Average wages needed to buy a home

The share of wages needed to buy a median priced home in the United States has been steadily increasing since 2012. This trend is reflected in the house price to income ratio as well. The availability of affordable housing will become more important, if the price to income ratio continues to develop in this way.