Here's where it's toughest for the middle class to find an affordable home

Homeownership is considered a mainstay of the American dream, but a shortage of affordable homes is blocking that pathway for many middle-income families, according to a new analysis from the National Association of Realtors.

Only about 1 in 5 listed homes in March were affordable for households with $75,000 in annual income, down from about half of all listings before the pandemic, according to the analysis of property listings in the nation's biggest 100 cities. To get back to that pre-pandemic level of affordable homes, the U.S. would have to add more than 400,000 new listings priced at $255,000 or below, it found.

The median sale price in the first-quarter of 2025 was almost $420,000, according to the Federal Reserve Bank of St. Louis.

Rising home prices and higher mortgage rates are pushing many homes out of the price range for middle-class households, said Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors (NAR). The affordability gap has its roots in the housing crisis that started in 2006, which caused new construction to dry up for years afterward, she added.

The lack of affordable homes is partly responsible for driving up prices even higher, as would-be buyers often bid up home prices to secure a property, Evangelou said. The result: More middle-income families are getting shut out of the housing market in many regions.

"It's discouraging for many people now," she told CBS MoneyWatch. "We hear from people who are earning a good income, and still feel homeownership is out of reach."

These households represent people in careers such as nursing and teaching and in trades like plumbing, she added. "The middle-income buyers are the backbone of the housing market, so we need homes they can actually afford," Evangelou said.

Twenty-six of the biggest 100 cities have affordability gaps that are worsening, the NAR research found. The cities with the worst affordability gaps are frequently in regions with zoning or permitting restrictions that make it difficult to construct new properties, Evangelou added.

They range from high-cost cities like Los Angeles to more affordable areas like the Harrisburg-Carlisle and Scranton in Pennsylvania, the report found.

Partly because of restrictive zoning rules, Pennsylvania ranked 44th out of all U.S. states in the pace of new housing built from 2017 to 2023, according to The Pew Charitable Trusts, a nonprofit foundation that conducts research on areas that shape public policy.

Even though Pennsylvania isn't seeing the same type of population growth as states like Texas or Florida, housing costs in the state have surged due to its lack of building over the past several years, Pew added. The biggest increases were in the state's northeastern region, which includes Scranton and Philadelphia, it noted.

Thirty cities are showing improvements in affordable listings, including metropolitan areas such as Raleigh-Cary, North Carolina and Columbia, South Carolina, the research found. These areas saw the availability of affordable listings increase by 5% in the last year.

Columbia, for one, has seen an increase in construction, with more properties such as townhomes built in the last few years, according to South Carolina's The State publication.

Another 44 cities are stuck in the middle, neither improving nor decreasing in their share of affordable listings, the NAR analysis found.

Both federal and local initiatives could help spur more homebuilding, helping relieve the affordability crunch in many regions, Evangelou said. For instance, easing zoning and building regulations could encourage more builders to construct new homes, while the federal and state governments could bolster downpayment assistance programs.

Innovative forms of housing could also help, according to new research from Pew Charitable Trusts. For instance, it singled out so-called micro-apartments, which are small, co-living designs where residents share kitchens and bathrooms — like a college dormitory — as a low-cost way to provide more housing.