The National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI) 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%.
“Given the housing affordability crisis the country faces, additional affordable housing supply is the only way to sustainably reduce the housing cost burden on American families,” said Carl Harris, chairman of the NAHB. “NAHB’s 10-point plan to address the housing affordability crisis the country faces gets to the heart of the problem and removes obstacles such as excessive regulation, inefficient local zoning codes and permitting barriers that prevent developers from increasing the nation’s housing supply.”
The CHI also found that low-income families, according to the NAHB—families earning only 50 percent of the median income—would have to spend 77 percent of their income to purchase a new median-priced single-family home in the second quarter.
The index was introduced in the first quarter of 2024, and the NAHB reported that there was no change between the first and second quarters in the percentage of family income required to purchase a new home (38%), and that the income percentage for low-income families also remained the same in both quarters (77%).
However, anyone in the US who wanted to buy an existing home had to expect rising costs in the second quarter, according to a press release. A typical family needed 39 percent of their income to pay for a median-priced existing home in the second quarter, compared to 36 percent in the first quarter. A low-income family needed 79 percent of their income, compared to 71 percent in the previous quarter.
“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, NAHB chief economist.
NAHB also found that in 14 of 176 markets in the second quarter, the typical family was severely cost-burdened (having to spend more than 50% of income on an existing median-priced home). In 89 other markets, such families were cost-burdened (having to spend between 31% and 50%). There are 73 markets where CHI is 30% of income or less.
The top 5 most cost-intensive markets
NAHB found that San Jose-Sunnyvale-Santa Clara, California, was the most cost-burdened market in the CHI in the second quarter, with 94% of a typical family’s income needed to pay the mortgage on an existing home. It was followed by:
- San Francisco-Oakland-Berkeley, California (79%)
- San Diego-Chula Vista-Carlsbad, California (76%)
- Urban of Honolulu, Hawaii (76%)
- Naples-Marco Island, Florida (74%)
Low-income families in all five of the above markets would have to spend between 147 and 188 percent of their income to cover a mortgage.
The 5 markets with the lowest cost burden
In contrast, NAHB found that Decatur, Illinois, was the least cost-burdened market in the CHI, where families only had to spend 15% of their income to pay a mortgage on an existing home. The least-burdened markets are:
- Cumberland, Maryland-West Virginia (17%)
- Springfield, Illinois (18%)
- Elmira, New York (18%)
- Peoria, Illinois and Binghamton, New York (simultaneous 19%)
In these markets, low-income families would have to spend between 30 and 39 percent of their income to cover the mortgage payments on a median-priced home.
Visit nahb.org/chi for full data tables and details.
