Housing affordability is at a 12-year low. Here are some tips for aspiring home buyers. Home buyers in the U.S. are facing an increasingly challenging real-estate market once again, as the 30-year mortgage rate heads back over 7%.

But just how challenging is it to buy a home? MarketWatch worked with Redfin to estimate how much a potential home buyer would need to earn to buy a typical home.

If a home buyer is paying for a median-priced $397,000 home with a 30-year mortgage at 7.09% after putting 20% down, they would have to pay roughly $2,711 per month, which includes not just their principal and interest, but taxes and insurance as well, according to Redfin.

To afford that on a monthly basis, a prospective buyer would need to make an annual salary of $108,440. Redfin considers a monthly payment as “affordable” if the buyer is spending no more than 30% of their income on housing.

Housing affordability is at the lowest level since 2012, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, which is when they began tracking the data. 

Only about 38% of new and existing homes sold between October 2023 and the end of December 2023 were affordable to the typical family in America earning a median income of $96,300, the NAHB said.

The NAHB’s median income figure is based on income estimates for metropolitan areas published by the Department of Housing and Urban Development. The Census Bureau, which measures income across the entire U.S., said that real median income in 2022 was $74,850.

With spring home-buying season fast approaching, Chen Zhao, economics research lead at Redfin, said that the high mortgage rates could play to some buyers’ advantage.

“So far the market has been slower than expected, with worse weather than usual in January, and rates ticking up in January and February,” Zhao said. “New listings are up though, indicating that buyers may have more to choose from this year and that may drive more transactions.”

Tips for house hunters as mortgage rates hover at 7% For the would-be home buyers who are in the throes of house hunting, hang in there. The market is expensive. It’s tough, so be prepared.