Zillow has reported that a buyer’s purchasing power has increased by more than $30,000 compared to a year ago, according to a new analysis. The analysis is based on changes in mortgage rates and household incomes. Mortgage rates dropped from an average of 6.96% in January 2025 to 6.1% by January 2026, household incomes increased, and home-price growth flattened. These factors have reduced the typical monthly principal-and-interest payment by 8.4% year over year. Zillow found that a median-income U.S. household can now comfortably afford a $331,483 home with a 20% down payment. This is $29,302 more than a year old and the highest level of purchasing power since March 2022. The biggest dollar gains were found in the most expensive housing markets. Despite these gains, the National Association of Realtors' report found that despite these improvements, the affordability gap remains significant.