Indiana is officially the teacher’s pet of the 2026 housing market, while New York just got sent to the principal’s office. In a new national ranking of where to buy a home in 2026, Realtor.com's State Report Cards put Indiana at the top of the class and New York at the very bottom, underscoring a familiar split between states that are building enough homes and those that are falling behind. The message is not subtle: affordability tracks closely with how many new homes actually get built, a dynamic that is likely to hang over housing markets and policy debates this summer.
Realtor.com’s Warning: Build Or Watch Affordability Slide
Joel Berner, a senior economist at Realtor.com, told Business Insider that "without new homes being built, affordability will suffer under constrained home supply." That warning runs straight through the report: places that manage to produce enough new housing today are the ones that remain within reach for typical buyers. Where building slows or stalls, prices do what they usually do under tight supply and high demand.
How The Report Cards Grade Each State
Realtor.com's state report cards hand out A-to-F grades using a mix of affordability measures and new-home construction data, including median 2025 listing prices and permit counts. According to Realtor.com, Indiana landed an A with a $295,810 median listing price and a median household income near $71,469, which keeps a typical mortgage payment below the common 30% affordability threshold. That combination of reasonable prices, local incomes and steady permitting is what helped several Midwestern and Southern states rise to the top of the class.
Winners, Losers And A Growing Regional Divide
The 10 best states skew heavily toward the Midwest and the South, with frequent flyers like Iowa, South Carolina, Texas and North Carolina showing up among the leaders. The 10 worst are clustered in the West and New England. As Business Insider details, New York, Massachusetts, Rhode Island, Hawaii and California all ended up on the low end because high prices and weak permitting rates make newly built homes far less accessible for typical buyers. For anyone thinking about a move, that translates into sticker shock in many coastal and New England markets and relatively more choices where builders are still adding meaningful new supply.
Why It Matters: A 4 Million‑Home Shortfall
Those individual state grades sit on top of a much bigger structural problem. Realtor.com's Housing Supply Gap Report estimates a national deficit of roughly 4.03 million homes after household formation outpaced housing starts in 2025. Realtor.com points to zoning rules, permitting logjams and labor shortages as key bottlenecks that are slowing efforts to close that gap, and notes that significantly higher construction levels are needed to ease the upward pressure on prices. Until building activity scales up in a serious way, any affordability relief is likely to be patchy and highly regional.
Bottom Line For Buyers
If you are shopping in a high-cost metro, the report is a not-so-gentle reminder that inventory, not just mortgage rates, will determine how painful your search feels. In a state on the "worst" list, buyers should be ready for bigger down payments, longer hunts and tight resale markets. In an "A" state, there may be more room to maneuver, but there is also competition for the parts of the market that remain relatively affordable. For policymakers, the takeaway is about as clear as it gets: the surest path to broader affordability is more homes, built faster, in the places where people actually want to live.
