Real house-buying power improved approximately 7% year over year in April as the market moved toward balance, according to First American. Months of supply rose from about 3.5 in April 2024 to 4.4 in April 2026, while nominal price growth slowed sharply.
Affordability is improving β but not through the channel most buyers are waiting for.
Key facts
- Real house-buying power: improved roughly 7% year over year in April.
- Months of supply: about 3.5 in April 2024, rising to 4.4 in April 2026.
- Prices: nominal growth slowed sharply.
- The improvement is attributed to better balance rather than lower mortgage rates.
Supply did the work, not rates
Months of supply rising from 3.5 to 4.4 is an increase of roughly 26% β a substantial change in the balance of negotiating power.
Housing is conventionally considered balanced somewhere around five to six months of supply. At 3.5 months, sellers held clear advantage; at 4.4, the market is approaching normal. That shift shows up as more inventory to choose from, longer decision windows, more successful contingency requests and greater willingness to negotiate price and repairs.
Critically, this happened without meaningful help from mortgage rates, which have stayed in a narrow band. Affordability improved because supply increased and price growth decelerated β a reminder that the rate everyone watches is one of three variables, and the other two have been doing the work.
Two years of improvement is a trend, not a blip
This marks a second consecutive year of improvement, which matters more than the size of any single reading.
One year could reflect unusual conditions. Two years of the same direction indicates a structural shift: supply is rebuilding as new construction delivers and more existing owners list, while price growth cooled from unsustainable pandemic-era rates toward something closer to historical norms.
The improvement remains partial. A 7% gain in buying power does not reverse the deterioration of 2022 and 2023, and affordability sits well below pre-2022 levels. But direction matters for expectations, and the direction has been consistent.
Why buyers may not feel it
There is a real gap between what the measure shows and how the market feels, and it is worth naming.
House-buying power is calculated from income, mortgage rates and prices β it describes what a household can afford. It does not capture the monthly payment shock a buyer experiences relative to what the same home would have cost at a 3% mortgage.
The payment data reflects that stall directly: the median purchase application payment was down just $13 year over year in May, essentially unchanged. Buying power can improve 7% while the monthly payment barely moves, because the improvement arrives largely through better selection and negotiating position rather than a smaller check.
Rising supply also has a second source that is less encouraging: some inventory reflects homes that failed to sell. And a portion of would-be supply is being withheld entirely, with delistings at their highest rate since 2020.
What it means
For buyers, the improvement is real and it is concentrated in leverage rather than price. More supply means inspection contingencies, repair requests and closing-cost concessions are negotiable again in many markets β value that never appears in a price statistic.
For sellers, 4.4 months of supply is a materially different environment from 3.5. Competing listings are more numerous, buyers are less rushed, and pricing to current comparables rather than last year’s peak is what generates offers.
For agents, this is the constructive version of the affordability conversation. Rather than waiting for rates to fall, buyers can be shown what improved balance actually delivers now β and how it fits the modest-growth backdrop projected in Realtor.com’s midyear forecast.
