Even as home price gains have slowed, buying a house doesn’t appear to be getting any easier.

Homebuyer affordability slid in June for the fifth consecutive month, according to the National Association of Realtors’ latest housing affordability index.

Based on the median price of a single-family house, $446,400, and the average interest rate on a 30-year fixed-rate mortgage of 6.57%, the income needed to qualify for a mortgage was $109,152 last month, according to the index. The formula also assumes the buyer makes a 20% down payment.

Affordability has been sliding since January, when the median home price was $398,200, the average rate was 6.19% and the income needed to qualify for a mortgage was $93,552, according to the index. 

However, compared with June 2025, “affordability [last month] was actually slightly better, as income growth outpaced home price appreciation and mortgage rates were modestly lower,” said Lawrence Yun, chief economist for NAR. In June 2025, rates were higher — 6.9% — and $110,928 in income was needed to qualify for a mortgage.

Mortgage rates had dipped below 6% in late February, but the onset of the Iran war and the accompanying specter of inflation pushed rates higher, experts say.

The latest inflation reading, based on the consumer price index, showed an annual increase of 3.5%, according to the Bureau of Labor Statistics. That matches the current annual growth in average hourly wages, BLS data shows, which generally means workers’ pay increases are getting eaten up by inflation.

Additionally, home prices typically rise from winter to mid-summer as buying activity increases, Yun said.

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Buying a home in California has become increasingly difficult, with a new study showing that first-time buyers in Santa Barbara face some of the steepest challenges in the state.

Santa Barbara was ranked 298th out of 300 cities in the U.S. by WalletHub in its latest survey, which assessed the best and worst cities for first-time home buyers.
The study compared 300 cities of different sizes across 22 metrics, including market attractiveness, affordability, and quality of life.

The city achieved a total score of 31.65 and an affordability rank of 299. Despite a decent quality of life rank (116), the city’s real estate market rank was 272.

The city’s affordability crisis was one of the main reasons for its low rank in the survey.

The survey identified Santa Barbara as the city with the least affordable housing, indicating that purchasing a home is significantly more expensive than in other parts of the country.

Additionally, the city also ranked third among cities with the highest cost of living.

Santa Barbara’s housing market is highly competitive and premium, with the median sale price of a home reaching $1.9 million over the last three months, while the median sale price per square foot touching $1,140, per Redfin estimates.

Santa Barbara is home to some of the most expensive housing markets in the nation, with the Santa Maria-Santa Barbara region ranking 10th in the overall national luxury market ranking, according to a fall 2025 study.

California’s Affordability Challenges

Santa Barbara was not the only California city to feature in the lower ranks in WalletHub’s survey.

While only five California cities, including Roseville, Clovis, Lancaster, Visalia, and Elk Grove, were featured among the top 100 best places for first-time home buyers, most cities ranked significantly lower in the study.

The 10 cities that were the worst places for buyers to purchase homes included:

• Berkeley, CA
• Santa Monica, CA
• Santa Barbara, CA
• Oakland, CA
• Anchorage, AK
• San Francisco, CA
• Costa Mesa, CA
• Los Angeles, CA
• San Mateo, CA
• Glendale, CA

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California Association of Realtors

 

• Existing, single-family home sales totaled 279,880 in June on a seasonally adjusted annualized rate, up 4.1 percent from May and 6.0 percent from June 2025.
   
• The statewide median home price declined to $904,640, down 2.8 percent from its record-breaking price of $930,260 in May, but up 0.4 percent from $901,310 in June 2025.
   
• Year-to-date sales increased 1.9 percent.

Closed escrow sales of existing, single-family detached homes increased for the third consecutive month on a year-over-year basis and posted their strongest annual gain since September 2025. California home sales reached a seasonally adjusted annualized rate of 279,880 in June, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2026 if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

June sales rose 4.1 percent from the revised 268,810 homes sold in May and were up 6.0 percent from 264,160 in June 2025. Despite the improvement, statewide sales remained below the 300,000 benchmark for the 45^th consecutive month. The June increase lifted year-to-date sales growth to 1.9 percent through the first half of 2026, suggesting housing demand may be broadening beyond the higher-priced segments that drove the market earlier in the year. Sales gains were driven primarily by entry-level and mid-tier homes, while sales of higher-priced homes retreated for the second straight month.

Pending sales also rebounded in June, rising 2.8 percent from a year earlier after posting the first annual decline of this year in May. On a month-to-month basis, however, pending sales slipped 2.8 percent, reflecting the seasonal moderation typically seen between May and June. Renewed conflict in the Middle East has raised concerns about higher energy prices and inflation, which could push mortgage rates higher and create new headwinds for housing demand as the summer buying season continues.

"California's housing market ended the first half of the year on stronger footing, with home sales reaching their highest level in six months despite elevated mortgage rates and ongoing affordability challenges," said C.A.R. President Tamara Suminski, a Southern California broker and REALTOR®. "As more buyers adjust to current market conditions and inventory of homes for sale continues to improve, we are encouraged that increased consumer confidence could support housing demand through the remainder of 2026."

After reaching an all-time high in May, California's statewide median home price eased in June but remained above the $900,000 mark for the third consecutive month. The statewide median price declined 2.8 percent from May's record level of $930,260 to $904,640 in June, deviating from the historical average gain of 0.8 percent typically observed between May and June.

The moderation in the statewide median price largely reflects a shift in the mix of homes sold rather than broad-based price weakness. The share of million-dollar-and-above home sales declined from a record 38.5 percent in May to 36.9 percent in June, placing downward pressure on the statewide home price.

"June's rebound in housing demand helped the market close the second quarter on firmer footing, with the broad-based increase in sales suggesting that some buyers are beginning to adapt to the current interest rate environment," said C.A.R. Senior Vice President and Chief Economist Jordan Levine. "However, the recent escalation of conflict in the Middle East has added renewed upward pressure on mortgage rates, which could weigh on affordability and create additional headwinds for housing demand as the summer buying season unfolds."

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