The dream of homeownership hasn’t disappeared, but for a growing share of Americans, the math doesn’t make sense.

New analysis from the National Association of Home Builders (NAHB) puts a sharp number on the problem many are facing: in 39 states and the District of Columbia, more than 65% of households cannot afford a median-priced new home. The disconnect between elevated home prices, mortgage rates that haven’t eased in any meaningful way, and lagging household income is defining today’s housing market.

Buy-and-hold real estate investors are in a different position than the average American, but we need to understand what these conditions produce downstream.

Why Isn’t the Gap Closing?

Supply still hasn’t caught up since the 2008 recession. Builders pulled back sharply after the crash and spent years digging out of a deficit, many consolidating or closing altogether. Construction activity has improved, but not enough—particularly at the entry-level price points where first-time buyers compete.

The pandemic only exacerbated these existing issues, both slowing the volume of new inventory and pushing costs up.

Then we add in the lock-in effect: homeowners who secured those sweet 3% mortgage rates a few years ago have virtually no financial incentive to sell, which keeps existing inventory off the market, too.

The result is a market supported by scarcity, which is part of why rate increases failed to bring home prices down the way many expected.

NAR data for Q4 2025 reinforces where things stand. Median home prices across our markets are considerably more accessible than the national picture, but they’re still (for the most part) climbing. Memphis came in at $292,000 (+4.7% year-over-year). St. Louis reached $295,000 (+9.1%). Tulsa hit $277,700 (+6.3%), and Oklahoma City came in at $265,000 (+3.2%). Even markets like Little Rock, at $226,400 (+4.3%), are trending upward despite being among the more affordable metros in the country.

When Buying Is Out of Reach, People Rent

Households priced out of homeownership don’t disappear; they rent. The data proves it. Rental households increased by nearly 900,000 in 2025 (2% increase) to 46.1 million. Owner-occupied growth only rose by 0.3% (234,000 households) in the same period.
The longer this affordability gap persists, the larger the pool of would-be buyers who are renting by necessity, and who aren't looking to scale back their lifestyle in the process. Millennials with families aren't trading the suburban single-family home for an apartment because mortgage rates went up. They still want the space, the yard, the school district. They're just renting it instead of buying it.

That's a structural demand driver for single-family rentals, and it isn't going away any time soon.

Why Secondary Markets Have an Edge

National affordability data tells part of the story, but market-level data tells a better one for investors.

The metros where we operate sit well below the national median, which means more residents can afford quality rental housing at rates that still pencil out for investors. Dallas-Fort Worth, at $366,600, is the highest-priced market in the portfolio — and it still comes in significantly under coastal comparables. Birmingham ($321,300), Huntsville ($341,400), and San Antonio ($316,200) all offer lower acquisition costs with stable or growing demand profiles.

The NAHB analysis is instructive here, too.

We have to remember that lower prices don't automatically translate to affordability if incomes don't support them — Mississippi is a useful example of that in the NAHB data. What distinguishes REI Nation's markets is the combination of relatively accessible price points, employment diversity, and in-migration that keeps rental demand sustained over time.

A solid investment market isn’t the same as a cheap market.

So, What About Investors?

None of this is about to go away any time soon, and that impacts how investors think about long-term rental demand. An undersupplied for-sale market, elevated ownership costs, and a large renter base that expects quality housing aren't conditions that resolve quickly. They also happen to create a durable backdrop for buy-and-hold investing in the right markets. That said, macro tailwinds won’t do the work for you. Here’s where to focus:

• Prioritize markets where prices and incomes align. Cheap acquisition costs only matter if local incomes can support quality rental rates. Look for the combination — accessible price points and employment depth.
• Underwrite conservatively. Demand may be strong, but cash flow projections should still account for vacancy, maintenance, and rate variability. Don't let a favorable macro snapshot overshadow weak property-level numbers.
• Think long-term on hold periods. The conditions driving rental demand — constrained supply and elevated ownership costs — aren't likely to resolve on a short timeline. Investors positioned for the long haul are better placed to capture that.
• Don't wait for a perfect entry point. Affordability constraints are pushing more households into the rental market now. Waiting for conditions to improve may mean sitting out the strongest years of demand.
• Lean on professional property management. Strong resident retention is how you maximize the value of sustained demand. That starts with how properties are managed day-to-day. [ Read 5 Red Flags That Scream 'Bad Property Management' (And How to Avoid Them) ]
  

If you want to talk through what current market conditions mean for your portfolio, REI Nation's advisors are a good place to start.