Zillow Study Shows Rates Must Drop to 4.43%; NYC and LA Unaffordable at 0%
Zillow study finds US mortgage rates must fall to 4.43% from 6% to keep payments within 30% of income; New York and Los Angeles remain unaffordable at 0% rates. Zillow expects a 2% home price decline in 2026 but says an 18% drop from 2019 peaks is needed for affordability.
1. Zillow Study Finds Affordability Thresholds
A Zillow study calculates that US mortgage rates need to drop to 4.43% from the current average of 6% for a typical home to cost no more than 30% of median household income under a 20% down payment scenario.
2. Top Markets Remain Unreachable
In high-cost metros such as New York, Los Angeles, Miami, San Francisco, San Diego and San Jose, housing costs—including taxes, insurance and maintenance—are so elevated that homes remain unaffordable even with a 0% interest rate.
3. Outlook on Price Trends
Zillow forecasts a modest 2% decline in home values in 2026, but notes that an 18% correction from 2019 peaks would be required to restore nationwide affordability, a scenario seen as highly unlikely without a severe economic downturn.