Due to limited resale inventory and efforts by builders to increase housing affordability, the average price of an existing home in the United States was higher than that of a new home in the second quarter of 2024. As a result, a family had to spend a larger portion of their income to purchase a typical existing home than to purchase a typical newly built home.
The National Association of Home Builders/Wells Fargo Cost of Housing Index found that a family with the national median income of $97,800 would need 38% of their income to cover the mortgage payment on a new median-priced home in the second quarter of 2024. The median price of a new home in the second quarter was $412,300 versus $422,100 for an existing median home. Therefore, the share of income needed to purchase a typical existing home was higher at 39%.
Challenges for low-income earners
The CHI also found that low-income families, those earning just 50 percent of the median income, would need to spend 77 percent of their income to buy a new single-family home at the median price in the second quarter. However, those looking to buy an existing home in the U.S. faced rising costs in the second quarter. A typical family needed 39 percent of their income to buy an existing home at the median price in the second quarter, up from 36 percent in the first quarter. A low-income family needed 79 percent of their income, up from 71 percent in the previous quarter.
NAHB’s view of the data
“We expect interest rates to gradually decline in the coming quarters, but home price growth is likely to slow as inventory increases and prospective buyers continue to face challenging home affordability conditions,” said Robert Dietz, chief economist at the National Association of Home Builders.
