The 5 cheapest and 5 priciest states to buy a home in 2024, according to study

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In 2024, aspiring homeowners need to earn a six-figure salary to afford a typical house in nearly half of all U.S. states, according to a new analysis.

In the West and Northeast, in particular, the highest annual income is needed to afford a median-priced home, while those in the South and Midwest need lower annual incomes by comparison.

The analysis, published by the personal finance site Bankrate, looked at home sales, mortgage rates, property taxes, and homeowners insurance rates across all 50 states and the District of Columbia to determine the annual salary needed in order to afford the typical home in each state.

It also looked at how much has changed since January 2020.

FILE - A realtor walks through the dining room during an open house at a home in Seattle, Washington, US, on Tuesday, March 26, 2024. Photographer: David Ryder/Bloomberg via Getty Images

Overall, Bankrate found that aspiring homeowners in the U.S. must earn $110,871 annually to afford a $402,343 home in 2024 – the median price according to Redfin.

The report said workers must earn 46% more income than they did in January 2020 to keep up with housing prices. This echoes previous estimates from Zillow, which also noted how homebuyers would need to make about $106,500 – or $47,000 more than they did in 2020 – to comfortably afford a home in 2024.

A surge in mortgage rates was one of the factors blamed for the increase in annual income needed to afford a home nationwide.

Bankrate noted how mortgage rates jumped more than three full percentage points in the last few years. In January 2020, the average 30-year fixed rate was 3.68%, compared to 7.07% as of March 20, according to Bankrate’s survey of large lenders.

Beyond elevated home prices and high mortgage rates, those looking to buy a home are also facing a shortage of houses. Many homeowners who locked in ultra-low mortgage rates during the pandemic are staying put to avoid today’s soaring mortgage rates, shrinking the pool of available homes for sale, experts say.

"Homes have become less affordable because home price appreciation has so far outpaced wage growth," Bankrate Analyst Jeff Ostrowski said in a statement. "Why have home prices gone up so quickly? Blame supply and demand."

"Over the past few years, the supply of homes has been constrained by a number of factors, including muted homebuilding and the lock-in effect. But demand for homes has been growing, and there are more buyers than sellers," Ostrowski added.

The 5 priciest US states to buy a home

Aspiring homebuyers in certain states located in the West and Northeast need to earn a minimum salary of $156,000 annually to afford a typical home.

California requires the highest annual salary to afford a typical home at $197,057, according to Bankrate’s analysis.

California: $197,057
Hawaii: $185,829
District of Columbia: $167,871
Massachusetts: $162,471
Washington: $156,814

The 5 cheapest US states to buy a home

The Rust Belt and Sun Belt were identified as the "most affordable regions" in the country for housing, according to Bankrate’s report.

Ostrowski said the Sun Belt, in particular, has experienced an influx of new homebuyers in the past few years. While the migration shift to the Sun Belt has made housing less affordable than it used to be, it’s "good for long-term homeowners in those regions," he added.

"That trend has been going on for decades, and it has intensified," Ostrowski said. "Meanwhile, some bargain-hunting buyers have moved to affordable markets in the Rust Belt and the Midwest."

Mississippi requires the lowest income to afford a home in the U.S. at $63,043, Bankrate said.