The housing crisis persists with even the middle class getting priced out of the market this year thanks to climbing prices, mortgage rates and a major inventory crunch.

The market is short, almost 320,000 home listings valued up to $256,000 — which is considered affordable pricing for middle-income buyers or households who earn up to $75,000 a year — according to an analysis from the National Association of Realtors (NAR) and Realtor.com , published in Jun.

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“Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through home ownership,” NAR senior economist and director of real estate research Nadia Evangelou said in a news release).

Evangelou recommends a two-fold approach to help with low affordability and limited housing.

“It’s not just about increasing supply,” she said. “We must increase the number of homes at the price range that most people can afford to buy.”

Housing prices are still incredibly high

Home prices surged to a record high in May, according to a recent report from real estate data and analytics company Black Knight.

Black Knight vice president of enterprise research Andy Walden said five consecutive months of gains have “fully erased the pullback” in home prices that began in July 2022.

Redfin currently places the median home sales price at just over $426,000.

And mortgage rates have just climbed to 6.96% — their highest level since November 2022, when rates topped 7%.

This combination of high prices and mortgage rates have made housing increasingly unaffordable for the typical American. Middle-income buyers can now afford to buy less than a quarter of listings compared to five years ago when they could take a swing at about half of all available homes, according to NAR.

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What can prospective buyers do?

Experts say it’s necessary to increase inventory in order to bring home prices down.

“Ongoing high housing costs and the scarcity of available homes continues to present budget challenges for many prospective buyers, and it’s likely keeping some buyers in the rental market or on the sidelines and delaying their purchase until conditions improve,” Realtor.com chief economist Danielle Hale told NAR.

“Those who are able to overcome affordability constraints may be increasingly drawn to newly constructed homes or to the suburbs and beyond, both of which may offer buyers more realistic opportunities for home ownership in the near term.”

There are other options for buyers encountering affordability hurdles as well.

Fix your credit score

With a higher credit score, you might be able to score a lower mortgage rate — in fact, applicants with scores of 740 or higher typically enjoy the lowest rates. Make sure to regularly check your score, inspect your credit report for errors, pay all your bills in full and on time and clean up any remaining debt still on the books.

Build your savings

Even if you can’t afford a home just yet, work on building your savings for a future down payment. With a conventional loan, the minimum down payment is typically 5% of the purchase price, but experts recommend putting at least 20% down to lower your monthly mortgage bill.

Compare different lenders

Don’t forget to shop around for different rates instead of settling for the first one you see — research shows comparison shopping can save you thousands of dollars over the life of your loan. Look into getting a preapproval from a lender as well. Having some proof of your reliability as a buyer could up your negotiating power with a seller or real estate agent.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.