Affordability Is Finally Moving in the Right Direction

One of the best ways to see this shift is by looking at how much of a household’s income it takes to buy a home.

According to Zillow, housing is typically considered affordable when it takes 30% or less of your monthly income to cover your expenses. That includes your mortgage payment, taxes, insurance, and basic maintenance.

For the past few years, the math was well above that threshold, and it made buying a home unachievable for many. But now, we’re slowly moving back toward a balance. Zillow research shows it’s taking less of a typical household’s income to buy a home than it did just a few years ago.

Now, we’re not all the way back to Zillow’s threshold of 30% of your income or less, so affordability is still tight. But things are trending in the right direction.

Why Affordability Is Improving

So, what’s driving the change? A lot of the focus lately has been on mortgage rates and how much they’ve come down over the course of the past year. But that’s not the only factor working in favor of buyers right now. Here are three trends benefiting buyers in Middle Tennessee today:

Mortgage rates have eased. Rates are near their lowest level in more than three years, which helps lower monthly payments. For buyers in Nashville, Franklin, and Brentwood, this means the cost of financing has become more manageable than it was even a year ago.

Home price growth has cooled. Prices aren’t falling in Middle Tennessee, but they’re growing much more slowly than they were a few years ago. That means buyers today aren’t facing the same sharp jumps in purchase prices, which helps keep monthly payments more manageable and buying more predictable.

Wages are growing faster than home prices. This one matters a lot. As Mark Fleming, Chief Economist at First American, explains:

“When income growth exceeds house price growth, house-buying power improves, even if mortgage rates don’t decline meaningfully.”

None of this makes buying cheap, but it does explain why the math is starting to work a little better for buyers than it did even just a year ago. Put simply, the forces that hurt affordability over the past few years are finally easing. Fleming again explains it well:

“Affordability remains challenging, but for the first time in several years, the underlying forces are finally aligned toward gradual improvement. Mortgage rates may drift down only slowly, but income growth exceeding house price appreciation will provide a boost to house-buying power, even in a higher-rate world. Affordability won’t snap back overnight, but like a ship finally catching a steady tailwind, it’s now sailing in the right direction.”

These three factors combined are why economists expect affordability to keep improving in 2026.

What This Means for Middle Tennessee Buyers

The national trends are encouraging, but how they show up locally is what really matters.

In Franklin, Brentwood, and Nashville, we’re seeing more inventory come to market as sellers who delayed listing in 2022 and 2023 are starting to make their moves. That means more options for buyers and less of the intense competition that defined the market a few years ago.

For buyers relocating to Middle Tennessee from higher-cost markets, the value proposition remains strong. For local move-up buyers or those coordinating a sale and purchase, the improved negotiability is making transactions more manageable. Inspection requests, repair credits, and closing cost considerations are back on the table in ways they weren’t 18 months ago.

In Williamson County specifically, home price appreciation has moderated from double-digit annual increases to much slower growth. That stabilization gives buyers time to make thoughtful decisions based on what they actually need rather than rushing out of fear of missing out.

Where We’re Seeing the Most Improvement

Not every market or price point is improving at the same speed. Some areas are already seeing significant gains in affordability, while others are moving more slowly.

In Middle Tennessee, the shift has been most noticeable in areas where inventory had been especially tight. Neighborhoods that were seeing multiple offers on nearly every listing are now giving buyers more time to evaluate and negotiate.

That doesn’t mean homes are sitting unsold. Well-priced properties in desirable locations still move. But the pressure that made buyers waive inspections or overbid just to compete has eased considerably.

What Hasn’t Changed

While conditions have improved, some fundamentals remain the same.

Location still matters. Properties in established neighborhoods, areas with good schools, and communities with strong long-term value continue to attract serious buyers quickly.

Quality and condition still drive decisions. Buyers are paying closer attention to maintenance, updates, and the overall state of a property. The willingness to overlook issues in exchange for speed has disappeared.

And buyer priorities around lifestyle, commute, schools, and community fit haven’t changed. These factors still guide decisions regardless of what’s happening with rates or affordability metrics.

Bottom Line

For the first time in quite a while, affordability is easing. That’s a meaningful shift.

And because this improvement isn’t happening everywhere at the same speed, understanding what’s changing locally is what really makes a difference. If you want to see how these trends show up in Middle Tennessee, specifically in Nashville, Franklin, Brentwood, or Williamson County, let’s talk it through.