After three consecutive quarters of modest improvement, housing affordability declined in the second quarter as higher mortgage rates, rising construction costs and economic uncertainty weighed on the market.
According to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI), results from the second quarter show that a family earning the nation’s median income of $106,800 needed 34% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of median income, would have to spend 67% of their earnings to pay for the same new home.
The figures are higher for the purchase of existing homes in the U.S. A typical family would have to pay 36% of their income for a median-priced existing home while a low-income family would need to pay 71% of their earnings to make the same mortgage payment.
“Housing affordability weakened for both new and existing homes in the second quarter, driven by several factors,” says NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “Buyers faced high mortgage rates and economic uncertainty, while builders dealt with rising construction costs, unnecessary regulatory burdens and labor shortages. The recently enacted 21st Century ROAD to Housing Act will help address many of these challenges, but implementation will take time.”
