Housing affordability is declining, and buyers are losing purchasing power as home prices rise and mortgage rates reach long-time highs.

Despite these challenges, people are still buying homes. Around 4 million are expected to be sold this year. However, skyrocketing mortgage rates and a shortage of homes for sale, which are fueling price increases and bidding wars, have weakened buyers' financial positions.

Today, people are borrowing significantly more money to buy homes at much higher interest rates than just a few years ago. Overall, the homebuyer's dollar has fallen by roughly half from the end of 2020.

In December 2020, mortgage rates reached one of their lowest levels ever, with a 30-year fixed-rate mortgage at 2.68%. This was a sharp drop from 3.78% a year earlier. Today, government-backed lender Fannie Mae reports that the average 30-year fixed-rate mortgage stands at 7.63%.

Prices have also soared. The average sale price of a single-family home exceeded $416,000 as of the second quarter of this year, compared to just under $360,000 at the end of 2020.

By some estimates, U.S. housing price indexes are at record highs. Lawrence Yun, chief economist at the National Association of Realtors, said that at the end of 2020, the monthly mortgage payment for a typical newly sold home was around $1,100 in principal and interest. Now it's roughly twice that amount.

According to NAR calculations, today a buyer needs to earn $107,232 per year to afford such an average home. This calculation is based on recent rates for a buyer making a 20% down payment and spending 25% of their gross monthly income on housing expenses.

This is somewhat conservative, as many people spend more than 25% of their budget on these expenses. U.S. housing prices vary widely. Still, it illustrates how much harder it is to afford a home and feel financially secure.

According to the U.S. Census Bureau, the real median household income in 2022 was $74,580.

"If you don't make a six-figure income, it will be very challenging" to afford a home in many markets, Yun told NBC News.