Which States Earned the Best Housing Grades in 2026?
Every fall, students brace themselves for report cards — but in the world of real estate, it's entire states that are sweating their scores. Realtor.com has released its second annual housing report card, grading all 50 states on two critical dimensions: housing affordability and home building activity. The results paint a vivid picture of where the American dream of homeownership remains within reach and where it has drifted frustratingly out of grasp for millions of families.
The verdict? If you're looking for an affordable place to plant roots, you're far better off heading to the Midwest or the South than to either coast. Indiana, Iowa, and South Carolina were the only three states to earn coveted A grades, while six coastal states received failing scores for the second consecutive year. Texas, never far from the conversation on housing opportunity, earned a respectable A-minus.
Indiana Takes the Top Spot — And It Earns It Across the Board
Indiana claimed the number-one position in this year's rankings with an overall score of 76.3, a significant jump from its fourth-place finish in 2025. What makes Indiana's case particularly compelling is how it got there. According to Realtor.com, the Hoosier State "doesn't dominate any single metric, instead it wins by doing everything well." That kind of balanced performance across affordability, inventory, and building activity is rare — and it's exactly what housing markets need to remain sustainable long-term.
One of Indiana's most attractive metrics is its median home price of $295,810, which is remarkably accessible by national standards. At that price point, the typical Indiana household spends just 28.3% of its monthly income on mortgage payments. That figure sits comfortably below the widely recognized 30% threshold that economists and housing experts use to define affordability — meaning homeownership in Indiana is genuinely attainable for middle-income families, not just a financial stretch that strains household budgets for decades.
Indiana also posted a strong affordability score of 0.89, a metric that measures how many listings on the market are accessible to households across different income percentiles. A higher score means more homes are within reach for more buyers, and Indiana's number placed it firmly among the nation's leaders.
Iowa: Still a Housing Powerhouse with the Nation's Most Affordable Mortgages
Iowa, which claimed the top spot in last year's inaugural rankings, held its ground impressively with an overall score of 75.8, good enough for second place nationally. The state's defining strength remains its extraordinary affordability. Iowa recorded the lowest share of income required to purchase a median-priced home of any state in the country — just 25.4% of monthly household income. That number is not just low; it is genuinely exceptional in a national housing market where cost burdens have become the norm rather than the exception.
Iowa's affordability score of 0.96 also ranked highest in the nation, signaling that an unusually broad cross-section of the state's residents can realistically access homeownership at current income and price levels. For first-time buyers, younger families, and those transitioning from renting to owning, Iowa continues to offer one of the most realistic pathways to building long-term wealth through real estate.
South Carolina Rounds Out the A-Grade States
South Carolina joined Indiana and Iowa in the elite A-grade tier, reflecting a housing market that has managed to balance growing demand with enough supply and pricing discipline to remain accessible. South Carolina's performance underscores a broader trend visible throughout the South, where pro-development policies, lower land costs, and consistent construction activity have helped keep homes within reach even as population growth accelerates in many parts of the region.
Texas, the largest state in the contiguous South by land area and among the fastest-growing in population, earned an A-minus — a strong result that reflects its aggressive home-building pipeline and relatively competitive pricing compared to coastal alternatives, even as certain metros within the state have seen significant price appreciation in recent years.
Coastal States Continue to Struggle — Six Fail for the Second Year Running
The bottom of the rankings tells a starkly different story. New York landed dead last with an overall score of just 8.5 and an affordability score of 0.51, meaning roughly half of the listings available in the state are out of reach for the typical household. Massachusetts, Rhode Island, Hawaii, California, and Connecticut also received failing grades — repeating their poor performance from the prior year's rankings.
This consistent pattern of failure among high-cost coastal states reflects structural problems that go well beyond market cycles: restrictive zoning laws, lengthy permitting processes, geographic constraints on new construction, and persistent supply shortages that keep prices elevated even as demand fluctuates. Oregon, which had failed outright in 2025, managed a narrow escape this year, scraping by with a D-minus.
The Bigger Picture: What These Grades Mean for Homebuyers
Realtor.com's housing report cards serve as more than a regional bragging rights contest. They offer homebuyers, investors, and policymakers a clear-eyed look at where housing markets are functioning well and where systemic failures are locking people out of ownership. States in the South and Midwest were the only ones to receive A and B grades, while 26 states landed in the C range — passing, but with meaningful room for improvement.
- Indiana led all states with a score of 76.3, excelling across affordability, inventory, and building metrics without relying on any single standout category.
- Iowa posted the nation's best affordability score at 0.96 and the lowest income-to-mortgage ratio at 25.4%, making it the most accessible state for buyers across income levels.
- South Carolina and Texas rounded out the top performers, reflecting the South's broader advantage in housing supply and cost competitiveness.
- New York, California, Hawaii, Massachusetts, Rhode Island, and Connecticut failed for the second straight year, highlighting deep-rooted structural barriers to affordability on both coasts.
For prospective buyers weighing a relocation or a first purchase, these rankings offer a useful framework for identifying markets where their dollar stretches furthest. While factors like job opportunities, lifestyle, and family ties always play a role in where people choose to live, the financial reality of housing costs increasingly shapes those decisions — and right now, the Midwest and South are winning that argument convincingly.
As housing affordability remains one of the defining economic challenges of this era, Realtor.com's annual report card provides a valuable benchmark for tracking progress and holding states accountable for the policies that shape their housing markets. The grades are in — and for millions of Americans searching for a place to call home, the message is clear: look inland.