Are Rising Wages Enough to Buy a Home in 2025?

When your paycheck goes up, but the dream home still feels out of reach—rising wages aren't keeping pace with housing costs in 2025.

The April 2025 jobs report delivered encouraging news: 177,000 new jobs were added to the U.S. economy, the unemployment rate held steady at 4.2%, and average hourly earnings climbed 3.8% year-over-year. It’s a sign of a resilient labor market—and a glimmer of hope for Americans feeling the squeeze of inflation.

But for those hoping to buy a home this year, the real question isn’t just whether they’re earning more. It’s whether that income is enough to actually afford a house in today’s market.

Wages vs. Home Prices: A Persistent Gap

While a 3.8% wage bump is a healthy gain, it’s not outpacing the housing market. According to recent reports, national home prices have been rising between 5% and 6% annually in 2025, depending on the region and property type. Add in stubbornly high mortgage rates—hovering near 6.8% on average—and affordability becomes an even steeper challenge.

To put it plainly: even as workers are earning more, the cost of buying a home continues to rise faster.

What It Means for Different Buyers

First-time buyers are arguably hit the hardest. These are often younger buyers with smaller savings and no equity to roll into a new purchase. While their wages may have improved, the higher cost of homes—and the larger down payments required—are still pushing the dream of homeownership further out of reach.

Move-up buyers do have the benefit of equity in their current home. If they’re selling in a market that’s seen strong appreciation, their wage gains could help them manage a larger mortgage for a more desirable home. But that equation still depends on interest rates and how far their income can stretch in their target neighborhood.

Renters trying to save to buy face a tough road. Rents have continued to rise in many markets, which can eat into the very wage gains that might help with a down payment or debt-to-income ratio.

➡️ Whether you’re hoping to buy your first home, upgrade to a larger space, or break free from rent, it’s more important than ever to work with a team that understands how wages, rates, and home prices intersect. We help buyers navigate pre-approvals, affordability strategies, and local market dynamics every day—contact us below to get started.

Sellers and Investors: Don’t Assume Buyers Can Pay More

For sellers, it may be tempting to assume that wage growth means buyers are ready to stretch their budgets. But in many cases, income isn’t keeping up with overall living costs or borrowing costs. Pricing too aggressively could lead to longer time on market or unexpected negotiation pressure.

Real estate investors, meanwhile, need to evaluate whether tenant income growth is strong enough to support rental increases. A healthy labor market helps, but rent hikes that outpace local wages could lead to higher vacancy risk or turnover.

What to Watch—and How to Prepare

Looking ahead, the tug-of-war between wages, rates, and inflation will continue to shape the housing market. Even modest wage gains are meaningful—but they must be paired with smart financial planning and realistic expectations.

For buyers, it may mean exploring creative financing options like seller concessions, interest rate buydowns, or down payment assistance. For sellers, it means working closely with experienced agents to price strategically. And for investors, it’s about aligning acquisition decisions with rental market fundamentals, not just macro trends.

Get Real About Affordability

We help buyers, sellers, and investors make smart real estate moves—even in a complex market. If you’re looking to understand what your income or property is worth in today’s conditions, contact us below for expert guidance.