Renting or owning a home is still unaffordable or out of reach entirely for many Mainers even though some parts of the state’s housing environment are showing signs of improvement.
That’s what the second annual Maine Housing Outlook Report, compiled by the Maine State Housing Authority, uncovered. The document, released on Friday, uses up-to-date data from state and national sources to outline what Mainers should expect for housing affordability and availability in the new year.
MaineHousing Director Dan Brennan said the document is meant to “help policymakers and the public make sound housing investments and decisions moving forward.”
The report discusses more than a dozen different data sets, from house prices to heating fuel costs, that influence Mainers’ ability to afford a place to live. The document also includes information on the economic health of the state, such as inflation and unemployment rates, and metrics regarding homelessness across the state.
Here are five key takeaways from the report.
More affordable housing is being built
The pace of building new affordable rentals, financed through MaineHousing’s development programs, is rising above historical averages.
By the end of 2025, 755 low and middle-income units had come online, according to the report. Another 1,209 affordable housing units are under construction now, 826 of which are slated to be completed before the end of this year.
That’s a marked improvement from the 751 affordable units that became available in 2023, followed by 775 rentals in 2024.
The report anticipates this higher production pace will continue, in part due to new state legislation passed in 2025 that created permanent funding for the state’s affordable housing income tax credit.
It costs more to build housing
Additional funding sources will be needed to support the building of affordable housing across the state, the report warned.
That’s because the cost to develop a single affordable housing unit jumped to more than $348,000 in 2025 after rising steadily for years. In 2024, it cost $294,600 to make an affordable unit.
While the report noted production costs may begin to stabilize in 2026 and 2027, policy and economic factors could change that.
“In particular, the Build America, Buy America Act, which sets requirements to source construction materials domestically, could lead to significant cost increases if the law is fully implemented,” the report reads. “Recent legislative efforts to exclude HUD-financed programs from BABA requirements may prevent those increases from occurring.”
Wages aren’t keeping up with home prices
Affordability continues to be a major barrier to accessing housing, which the report largely credits to incomes not rising in tandem with real estate prices.
In the last five years alone, the median home price in Maine grew by more than 36% to surpass $400,000 in 2025. At the same time, the wages and salaries of Maine workers grew by less than 27%.
A decade ago, Maine’s median income exceeded what was needed to afford an average home in the state. But from 2015 to 2024, the state’s median income grew by only 44% while the income needed to afford the median priced home rose by 187%.
The annual income needed to afford a Maine home has risen to nearly $121,000 as of 2024 while Maine’s median rests around $73,000.
More renters are housing cost burdened
The report found more households that rent were cost burdened, meaning they spend more than 30% of their income on housing, in 2024 compared with 2021 and 2018.
In 2024, more than 60% of renters earning $35,000 to $49,999 were cost burdened and nearly 40% of households taking home $50,000 to $74,999 were cost burdened.
That’s up from the 37% of renters earning $35,000 to $49,999 who were cost burdened in 2018, or the 9% of households making $50,000 to $74,999 who were cost burdened in 2018.
Those who spend a disproportionate amount of their income on housing have less money to spend on other necessities, use for emergencies or save to buy a home.
Interest rates and housing supply could improve in 2026
Over the last few years, interest rates on mortgages hovered around 7%, which made buying a home unaffordable for many. High interest rates can also influence housing supply, as homeowners may not want to move if they have a low interest rate on their current house.
But, recent data shows interest rates are slowly dropping, which could generate more homebuyer activity despite housing prices remaining high.
That’s because lower interest rates on monthly mortgage payments expand how much house a buyer can afford. For example, if a household can afford a mortgage payment of up to $2,000 each month, then a rate cut from 7% to 6% on a 30-year loan raises the buyer’s budget from $250,000 to $270,000, the report explains.
The number of annual home sales in Maine have remained relatively stable in the last few years since reaching a fever pitch in 2021 during the pandemic-era housing frenzy. The report noted that level sales while prices continue to rise can indicate that demand for homes continues to exceed supply.
The number of mortgages issued did tick up to more than 12,000 in 2024, up from roughly 11,200 the year before. The report said this was likely due to buyers’ fading expectations that mortgage rates would drop while pressure on buyers and sellers who had been waiting to move mounted.