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Purpose This paper aims to examine the evolution of housing affordability for workers in Mexico between 2005 and 2020, emphasizing regional disparities and identifying the main determinants that have widened the gap between housing prices and wages. Design/methodology/approach Using cross-sectional time-series data for Mexico’s 32 states, the study applies feasible generalized least squares econometric models to analyze the divergence between the housing price index and the wage index. Explanatory variables include demand and supply factors. Findings Housing affordability has deteriorated substantially, especially in Mexico City (the country’s capital), where housing prices increased 155.57% more than wages over the analyzed period. The real interest rate, which affects both the demand and supply side, is the strongest determinant: a one-point increase raises housing prices by 1.91% relative to wages. A one percent reduction in available surface, after discounting ejidal and built surfaces, increases housing prices by 0.48% more than wages. High migration, population density and growing remittances also exacerbate the problem. Research limitations/implications The SHF (Sociedad Hipotecaria Federal) housing price index used covers only dwellings purchased with insured bank loans, excluding informal housing and very low-income households. Despite this limitation, the findings have clear policy implications. Reducing housing affordability loss requires reducing high mortgage interest rates – including by promoting competition in the commercial banking market – and decentralizing public institutions away from Mexico City. Originality/value The paper provides one of the few nationwide state-level econometric analyses of housing affordability in Mexico and proposes a new housing affordability measurement instrument for contexts with limited data.