The average American salary is no longer enough to afford a home. In fact, it’s not even close.

According to Redfin, homebuyers need to earn $114,627 per year to afford the typical U.S. home. That’s up 15% from last year and a staggering 50% since the start of Covid.

The median annual U.S. salary in the third quarter of 2023 was $58,136, according to the Department of Labor. That means the average American would have to double their income before homeownership made financial sense.

Households with pooled income don’t fare that much better. Inflation-adjusted median household income has fallen by 2.3% to $74,580 annually, according to the latest available Census data.

Income needed to buy a home increased in all major metro areas, led by Miami and Newark, N.J., Redfin said. In these cities, homebuyers must earn 33% more than last year just to afford the average home.

Homebuyers who dare to venture into the housing market today face a triple-whammy of obstacles that are getting harder to overcome.

Higher mortgage rates are supposed to bring prices down, but they’re not

Homeownership is less affordable because of three underlying factors: housing costs are rising, mortgage rates are surging, and income growth isn’t keeping up.

Under normal circumstances, rising mortgage rates would reduce housing demand, leading to lower prices. But not this time.

“In a homebuyer’s ideal world, rising mortgage rates would push demand and home prices down enough to make up for high interest payments. But that’s not what’s happening now,” said Redfin research lead Chen Zhao.

The reason? Housing supply is near record lows.

Housing supply this year has fallen to the lowest level since 1999, according to the National Association of Realtors (NAR), an industry trade group. A lack of supply is the biggest factor preventing homebuyers from making a purchase.

“Housing inventory and affordability continue to be the top obstacles that hold back potential clients in the housing market,” said Jessica Lautz, NAR’s vice president of research.

The housing affordability crisis is affecting all major demographics, but none more than first-time buyers. Redfin didn’t offer many solutions except to “think outside the box” (yes, really).

An uphill battle

In addition to the rising costs of homeownership, first-time buyers face another obstacle: They don’t have equity for a down payment.

This means they have to save cash, which has become harder due to persistent inflation, rising rent costs, and the resumption of student loan payments.

“The housing market has really become a market of 'haves' and 'have-nots,' and the first-time homebuyers are the ones who are losing in this environment,” Lautz told Business Insider. “They do not have housing equity, and they do not have the ability to quickly move into the housing market without that.”

Many first-time buyers opt for a “starter home,” but even these properties are becoming increasingly out of reach.

According to Redfin, the typical U.S. starter home sold for a record $243,000 in June. If you're a first-time buyer, you're looking at a minimum of $65,000 to make that work.