Grading the States: Affordability & Homebuilding Report Cards—2026 Update
With a nationwide housing shortage that continues to hover near 4 million homes, affordability pressures remain for millions of Americans. In this updated edition of our state report cards for affordability and homebuilding, we revisit every state’s performance on the metrics that matter most: how affordable homes currently are for local earners, and how actively each state is building to meet future demand. This year’s refresh reveals a familiar regional divide, but also some notable shifts beneath the surface, with a new state at the top of the class and a handful of states whose grades moved dramatically in either direction.
The 2026 class rankings: What changed and what didn’t
A new valedictorian: Indiana takes the top spot
The biggest story in this year’s rankings is at the top. Indiana rises from No. 4 to No. 1, earning an A (76.3) and claiming the highest score of any state. Last year, Indiana earned a B+ and sat behind South Carolina, Iowa, and Texas. This year, it leapfrogs all three on the strength of a remarkably well-rounded scorecard.
Indiana doesn’t dominate any single metric the way some of its peers do. Its permit-to-population ratio of 1.02 is solid but unspectacular, reflecting building activity roughly proportional to its population. Where Indiana separates itself is on the affordability side: The state’s median-priced home of $295,810 requires just 28.3% of the median household income of $71,469, comfortably below the 30% threshold that is commonly used to define affordability. Its REALTORS® Affordability Score of 0.89 is among the highest in the country. Combined with a moderate new-construction premium of 40.5%, Indiana delivers the kind of well-rounded performance that this report is designed to reward.
The familiar honor roll
The rest of the top five will look familiar from last year. Iowa holds steady at No. 2, but with an upgraded grade. It moves from an A- to a full A (75.8), continuing to lead the nation in pure affordability. Iowa’s median home price of $282,886 requires just 25.4% of its median income, the lowest share in the country, and its REALTORS® Affordability Score of 0.96 remains the highest of any state. Iowa’s weakness remains the same: Its permit activity is roughly proportional to its population (ratio of 0.99), and new-construction homes cost 56% more than existing ones, suggesting that builders are focused on larger, more expensive products rather than entry-level inventory.
South Carolina drops two spots to No. 3 but retains its A grade (75.2), maintaining the same total score as last year. South Carolina remains the report’s building champion with a permit-to-population ratio of 1.96, meaning it accounts for nearly twice as many building permits as its population share would suggest, and new-construction homes that are actually 5.7% cheaper than existing inventory. That negative new-construction premium is a rare and valuable feature, signaling that builders are delivering a competitively priced product. South Carolina’s current affordability metrics, while middling (36.7% of income for a median home, an affordability score of 0.68), are buoyed by this exceptional building activity that suggests a brighter future.
Texas slips one position to No. 4 with an A- (71.0). Texas remains by far the nation’s largest homebuilder, accounting for 14.6% of all building permits issued, more than any other state and well above its 9.3% population share. But its median listing price of $364,749 takes 32.5% of the state’s median income, pushing it just past the affordable threshold. The new-construction premium in Texas has narrowed to 7.6%, a positive sign that builders are increasingly delivering competitively priced homes.
North Carolina holds at No. 5 with a B+ (68.6), unchanged in rank from last year. Like South Carolina, North Carolina benefits from strong building (its permit-to-population ratio of 1.84 is among the highest in the nation) and a slightly negative new-construction premium of -1.5%, indicating that new homes are priced below existing ones. Its affordability challenge is more acute, with a median home requiring 39.4% of median income.
The biggest movers
Every year, some states make dramatic leaps in the rankings while others slide. The 2026 update produced some of the most significant moves we’ve seen.
Delaware (+12 spots, No. 19 → No. 7, B) is this year’s most improved state, vaulting into the top 10 with a score of 66.1. Delaware’s permit-to-population ratio of 1.46 reflects building activity well above its population share, and its new-construction premium of 16.0% is moderate. While its median listing price of $486,044 is relatively high, the state’s strong median income of $87,667 helps offset some of the affordability pressure.
Utah (+12 spots, No. 29 → No. 17, C+) matches Delaware’s jump, climbing from the bottom half into the upper third. Utah’s rise is driven by its exceptional building activity: a permit-to-population ratio of 1.82 and a low new-construction premium of just 4.7%. However, affordability remains a significant challenge: The median listing price of $589,911 requires 42.1% of the state’s median income, among the highest ratios in the country. Utah is a case study in how aggressive homebuilding can improve a state’s outlook even when current prices are elevated.
Colorado (+9 spots, No. 27 → No. 18, C+) also made a significant climb, driven by a healthy permit-to-population ratio of 1.34 and a relatively low new-construction premium of 9.6%. Like Utah, Colorado’s affordability metrics (41.4% of income for a median home) remain a headwind.
Kansas (+7 spots, No. 20 → No. 13, B) rounds out the big movers upward. Kansas is the inverse of Utah. It doesn’t build a lot relative to its population (ratio of 0.80), but its affordability numbers are exceptional: a median home of $292,632 requires just 27.0% of median income, and its affordability score of 0.85 is among the highest in the country. Kansas was also the beneficiary of some listing price growth by the states ranked ahead of it last year, leapfrogging Minnesota and Virginia, where affordability degraded year over year.
On the other side, several states suffered significant declines:
Alabama (-8 spots, No. 13 → No. 21, C), Maryland (-8, No. 23 → No. 31, C), and New Jersey (-8, No. 35 → No. 43, D) all dropped eight spots, the largest declines in the dataset. Alabama’s fall is particularly notable. It was highlighted as a solid performer last year, but its permit-to-population ratio of 0.87, falling from 0.92 last year, and its modest affordability scores dragged it down the rankings. Maryland, despite having the highest median income among the fallers ($99,340), saw its building activity fall short, with a permit-to-population ratio of just 0.51. New Jersey faces a similar imbalance: strong incomes but inadequate construction and a steep 71.6% new-construction premium.
Louisiana (-7, No. 12 → No. 19, C) and Wisconsin (-7, No. 16 → No. 23, C) also fell sharply. Louisiana’s median income of $59,290 makes even its relatively modest home prices a stretch, and its permit activity trails its population share. Wisconsin’s building activity is essentially flat relative to its population (ratio of 1.02), and a 38.0% new-construction premium suggests builders are not focused on providing an affordable product.
The stagnant bottom
If the top of the class reshuffled, the bottom barely moved at all. Connecticut (No. 46, F), California (No. 47, F), Hawaii (No. 48, F), Massachusetts (No. 50, F), and Oregon (No. 45, D-) all hold the same rankings as last year. Montana (No. 44, D) is also unchanged. These states face structural challenges such as high prices, constrained land, restrictive zoning, and building costs that far outpace what middle-income buyers can afford. A single year of data is unlikely to alter any of these in a meaningful way. That doesn’t mean that they can’t improve, but the gaps these states have to cover will require several years of consistent improvement to register.
New York drops two spots to last place (No. 51, F), with a score of just 8.5. The state’s median listing price of $668,173 requires 55.2% of median income, and its permit-to-population ratio of 0.45, meaning building permits are less than half what its population share would suggest, reflects persistent underbuilding relative to demand. The new-construction premium of 73.9% suggests that the homes being built are overwhelmingly expensive, doing little to alleviate affordability pressures for typical buyers.
The regional divide: Deeper than ever
The regional pattern we identified last year has only sharpened. Every A and B grade in this year’s report belongs to a state in the South or Midwest. The average score for Southern states is 60.4 (average rank: No. 16); for Midwestern states, it’s 60.9 (average rank: No. 16 as well). Western states average 41.8 (average rank: No. 35), and the Northeast averages just 30.0 (average rank: No. 43).
Within the South, 13 of 16 states land in the top half of the rankings. The only exceptions are Tennessee (No. 27), Maryland (No. 31), and Mississippi (No. 35). In the Midwest, the range runs from Indiana at No. 1 to Illinois at No. 30, but the cluster is tight. Ten of 12 Midwestern states rank in the top 30.
The West and Northeast continue to dominate the bottom. All six F grades belong to states in these regions: Connecticut, California, Hawaii, Rhode Island, Massachusetts, and New York. The highest-ranked Western state is Utah at No. 17, and the highest-ranked Northeastern state is Pennsylvania at No. 32.
Building activity: The same 7 carry the load
The construction picture is similarly persistent. The same seven states that accounted for over half of building permits last year do so again in the updated data: Texas (14.6%), Florida (12.3%), California (7.3%), North Carolina (6.0%), Georgia (4.2%), Arizona (3.6%), and South Carolina (3.2%) collectively represent 51.2% of all permits issued.
Idaho continues to lead the nation in building intensity, with the highest permit-to-population ratio of 2.10. South Carolina (1.96), North Carolina (1.84), Utah (1.82), and Florida (1.79) round out the top five in this metric. Utah jumped into the top five this year, displacing Arizona to sixth.
At the other end, states with the lowest building intensity relative to population include Alaska (0.28), Illinois (0.35), Rhode Island (0.37), Massachusetts (0.41), and New York (0.45). These are states where regulatory, geographic, or economic barriers continue to constrain new supply. New York managed to avoid the bottom five in this metric last year, but the 17% year-over-year permitting slowdown the Empire State experienced earned it this unenviable distinction.
Five states feature a negative new-construction premium, meaning newly built homes are actually cheaper than existing ones: South Carolina (-5.7%), Idaho (-4.6%), California (-3.8%), Florida (-3.1%), and North Carolina (-1.5%). There were five states in this situation last year as well, but Arizona replaced North Carolina. This is a notable indicator, suggesting that in these markets, builders are finding ways to deliver a product that competes on price with existing inventory, potentially expanding access for buyers who might otherwise be priced out.
What it all means
This year’s update tells a consistent but increasingly urgent story. The structural advantages that make the South and Midwest more affordable, such as available land, lower regulatory barriers, and relatively strong building activity, continue to set those regions apart. Indiana’s rise to No. 1 demonstrates that balanced, steady performance across both affordability and building can outpace states that excel in just one dimension. South Carolina and North Carolina show what’s possible when builders deliver competitively priced new inventory. Iowa proves that strong wages and moderate prices can sustain affordability, at least for a time, even without exceptional construction activity.
At the same time, the persistence of the states at the bottom of the rankings underscores that without meaningful policy reform, the gap between America’s most and least affordable housing markets will only grow. More permissive zoning, streamlined permitting, and incentives for competitively priced new construction are the curriculum for improvement. All levels of government, as well as private community organizers, should focus on removing the barriers to homebuilding that have created the current predicament.
Though progress is being made to build more homes in this country, it’s important to keep in mind how far we are from our goals. Just 11 of the 51 states plus DC can say that their median home is affordable to their median earner using the 30% of income rule. These bright spots are not widespread: All but one of these states are in the Midwest or South. Homeownership remains a distant goal for the everyday residents of most states in the Union.
Methodology
The 2026 report cards are largely based on data with a 2025 reference period. The REALTORS® Affordability Score is derived from the REALTORS® Affordability Distribution Curve, which examines how many listings are affordable to those in a particular income percentile. The Affordability Score varies between 0 and 2 and is a calculation that is equal to twice the area below the Affordability Distribution Curve on a graph. Median list price is calculated for each state across Realtor.com listings active in 2025. Median Household Income comes from 2025 estimates by Claritas. Permit data comes from the U.S. Census Bureau’s Building Permit Survey, and each state’s total is divided by the national total to compute the share. Population data comes from 2025 U.S. Census Bureau estimates, and each state’s total is divided by the national total to compute the share. The new-construction premium comes from comparing the median prices of Realtor.com listings grouped into new builds and existing homes for each state.
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