Home affordability gaps widen as supply lags

homebuilding and – Realtor.com’s annual housing report card for 2026 ranks Indiana among the best states to buy a home for affordability and homebuilding, while New York lands at the bottom. The grading—based on how affordable homes are and how much new housing is being built—sh

For buyers shopping with mortgage rates and household budgets already under pressure. the difference can be as simple as which state they choose. Realtor.com’s annual housing report card—released on Monday—now gives readers a clear. letter-graded snapshot of where affordability holds up and where new homebuilding is struggling.

The rankings grade all 50 states and Washington. DC from A to F based on two measures: how affordable homes are and how much new housing is being built. Joel Berner. a senior economist at Realtor.com. said homebuilding is a key indicator of a housing ecosystem because it points to affordability over time.

“Without new homes being built, affordability will suffer under constrained home supply,” Berner said.

This year’s top performers—states earning either an A or a B grade—were concentrated mostly in the Midwest and South. regions known for lower cost of living and an abundance of relatively affordable homes. At the bottom. states that received grades between C and F were concentrated largely in the West and New England. where building is often slower and more expensive due to zoning rules. permitting delays. and building codes.

The report makes one central tension hard to miss: Indiana leads the list even as Berner warns that “unremarkable” new-home construction there could become a problem later, while several high-cost, low-score states are held back by supply constraints they can’t easily outbuild.

Indiana ranked No. 1, largely because incomes there are relatively high compared with home prices, giving buyers more affordable options. But Berner said the state’s “unremarkable” new-home construction could point to affordability problems in the future.

At the other end. Berner said building in many lower-graded states is slower and more expensive because zoning rules. permitting delays. and building codes often slow progress. That leaves them less able to compete with states in the middle of the country. where land is cheaper and building is generally easier.

The 10 best states for homebuilding and affordability

10. Oklahoma — Grade: B. Median listing price: $299,000. Median Household income: $65,000. Population: 4,123,288.

9. Arkansas — Grade: B. Median listing price: $300,000. Median Household income: $61,000. Population: 3,114,791.

8. South Dakota — Grade: B. Median listing price: $379,000. Median Household income: $77,000. Population: 935,094.

7. Delaware — Grade: B. Median listing price: $486,000. Median Household income: $88,000. Population: 1,059,952.

6. Nebraska — Grade: B+. Median listing price: $346,000. Median Household income: $77,000. Population: 2,018,006.

5. North Carolina — Grade: B+. Median listing price: $299,000. Median Household income: $65,000. Population: 11,197,968.

4. Texas — Grade: A. Median listing price: $300,000. Median Household income: $61,000. Population: 31,709,821.

3. South Carolina — Grade: A. Median listing price: $379,000. Median Household income: $77,000. Population: 5,570,274.

2. Iowa — Grade: A. Median listing price: $486,000. Median Household income: $88,000. Population: 3,238,387.

1. Indiana — Grade: A. Median listing price: $346,000. Median Household income: $77,000. Population: 6,973,333.

The 10 worst states for homebuilding and affordability

10. New Hampshire — Grade: D+. Median listing price: $586,123. Median Household income: $96,809. Population: 1,409,032.

9. New Jersey — Grade: D. Median listing price: $556,344. Median Household income: $99,357. Population: 9,500,851.

8. Montana — Grade: D. Median listing price: $628,387. Median Household income: $72,066. Population: 1,137,233.

7. Oregon — Grade: D-. Median listing price: $564,005. Median Household income: $80,356. Population: 4,272,371.

6. Connecticut — Grade: F. Median listing price: $518,892. Median Household income: $95,392. Population: 3,675,069.

5. California — Grade: F. Median listing price: $742,305. Median Household income: $95,065. Population: 39,431,263.

4. Hawaii — Grade: F. Median listing price: $767,360. Median Household income: $94,556. Population: 1,446,146.

3. Rhode Island — Grade: F. Median listing price: $563,235. Median Household income: $85,698. Population: 1,112,308.

2. Massachusetts — Grade: F. Median listing price: $763,660. Median Household income: $98,170. Population: 7,136,171.

1. New York — Grade: F. Median listing price: $668,173. Median Household income: $82,657. Population: 19,867,248.

The report’s underlying data shows how much the affordability story depends on where new supply can actually be built. Realtor.com used median listing prices and median household incomes for these states from Realtor.com, while population data for each state came from the US Census Bureau.

For buyers thinking about 2026, the message is not just which states feel easier today—it’s which ones are positioned to keep it that way. And in Berner’s framing, the real hinge is whether construction stays consistent enough to prevent future affordability from slipping as home supply tightens.

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