Buying a home is going to get affordable again — but you might have to wait until 2030

Goldman Sachs expects housing affordability in the US to return to “normal levels” by the end of the decade.

Buying a home could get much more affordable, but Americans might have to wait a while.

In a report published on September 11, Goldman Sachs analyst Vinay Viswanathan shared the bank’s forecast for US housing affordability levels in the years to come. As things stand, Viswanathan said that the combination of high home prices and mortgage rates plummeted affordability to record lows.

“By almost any estimate, affordability is the worst right now than it’s been for as long as we have data on record — so since the early 1980s,” he said.

However, there could be a light at the end of the tunnel. Viswanathan said the bank is projecting a “slow grind in affordability back down to normal levels” — one that could get the US housing market out of its “affordability trap” by 2030.

Here’s how Goldman Sachs expects this to play out.

First, the bank expects mortgage rates to gradually fall as the Federal Reserve cuts interest rates — experts expect additional rate cuts over the next year.

Second, the bank expects Americans’ income growth to exceed inflation in the coming years, putting people in a better position to afford a home. Over the past year, wage growth has exceeded inflation as price growth has slowed, and despite an uptick in the unemployment rate, layoff rates remain low.

Third, home prices will continue ticking up — but at a slower rate.

“We think home price growth will be positive but below trend — just enough that we will see affordability stabilize,” Viswanathan said.

To be sure, predicting the future of the US housing market is no easy task, and housing affordability levels will continue to vary by city and state. But if Goldman Sachs is right — and these three developments come to pass in line with the bank’s projections — buying a home could become much more affordable for Americans. They might just have to be patient.

“We think we will get back near a healthy level of affordability by the end of the decade, so it will be a five-year odyssey of slow normalization,” Viswanathan said.

Unfortunately for eager homebuyers, things might not get too much better over the next year. Viswanathan said Goldman Sachs expects US home prices to rise 4.4% in 2025, up from a 3.2% projection in April. Additionally, it could take a while before the Federal Reserve’s interest rate cuts bring about significantly lower mortgage rates.

“We think it’s going to be a slow but steady grind lower over the coming years,” Viswanathan said.