As a result of limited resale inventory and measures by home builders to increase housing affordability, the median price of an existing home in the United States during the second quarter of 2024 was higher than that of a new home. Consequently, a family needed to spend more of their income to buy a typical existing home than a typical newly built home.

The National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI) found that in the second quarter of 2024, a family earning the nation’s median income of $97,800 needed 38% of its income to cover the mortgage payment on a median-priced new home. The median price of a new home in the second quarter was $412,300 compared to $422,100 for a median existing home; therefore, the share of income needed to buy a typical existing home was higher at 39%.

“With the nation facing a housing affordability crisis, additional, attainable housing supply is the only way to sustainably ease housing cost burdens for American families,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “NAHB’s 10-point plan to tackle the housing affordability crisis gets at the heart of the problem, which is addressing impediments such as excessive regulations, inefficient local zoning rules and permitting roadblocks that prevent builders from increasing the nation’s housing supply.”

The CHI also found that low-income families, defined as those earning only 50% of the median income, would have to spend 77% of their earnings to pay for a median-priced new single-family home in the second quarter.

The index debuted in the first quarter of this year. There was no change in the percentage of a family’s income needed to purchase a new home (38%) between the first and second quarters of 2024. The income percentage for low-income families remained unchanged as well (77%).

However, those seeking to purchase existing homes in the U.S. found their costs rising in the second quarter. A typical family needed 39% of their income to pay for a median-priced existing home in Q2, up from 36% in Q1. A low-income family required 79% of their income versus 71% in Q1.

“While interest rates are expected to gradually move lower in coming quarters, home price growth will likely slow as inventory levels rise and prospective buyers continue to experience challenging affordability conditions,” said NAHB Chief Economist Robert Dietz.

The CHI is a quarterly analysis of housing costs in the U.S. and at metropolitan area levels. It represents the share of a typical family’s income needed to make a typical mortgage payment calculated using median home prices with assumptions about down payments and additional costs like taxes and insurance. Median family income data is published by HUD.

In Q2 across 176 metropolitan areas analyzed by CHI:

- In 14 markets, families were severely cost-burdened (paying more than 50% on mortgages).

- In 89 markets, families were cost-burdened (paying between 31%-50%).

- In 73 markets, families paid less than or equal to 30%.

San Jose-Sunnyvale-Santa Clara, Calif., was identified as most severely cost-burdened where families used up to 94% of their incomes on mortgages for existing homes. This was followed by San Francisco-Oakland-Berkeley (79%), San Diego-Chula Vista-Carlsbad (76%), Urban Honolulu (76%), and Naples-Marco Island (74%). Low-income families would need between 147%-188% of their incomes across these markets.

Conversely, Decatur Ill., was noted as least cost-burdened where only 15% was required for mortgages on existing homes. Other least burdened markets included Cumberland Md.-W.Va. (17%), Springfield Ill. (18%), Elmira N.Y. (18%), Peoria Ill., and Binghamton N.Y., both at approximately 19%. Low-income families faced mortgage payments requiring between 30%-39%.

For further details visit nahb.org/chi.