Housing Affordability Crisis Persists Despite Builders' Efforts

Strategic Insights -

While new homes remain largely unaffordable, the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI) shows that builder efforts to improve housing affordability paid dividends in the second quarter of 2025. The CHI results reveal that a family earning the nation's median income of $104,200 needed 36% 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 71% of their earnings to pay for the same new home.

Key Takeaways:

  • In the second quarter of 2025, a family earning the nation's median income of $104,200 needed 36% 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 71% of their earnings to pay for a median-priced new home.
  • Existing home prices exceeded those of new homes in the second quarter of 2025, with a typical family needing 37% of their income to cover the mortgage payment on an existing home.
  • Low-income families would have to spend 74% of their earnings to make the same mortgage payment on an existing home.
  • The CHI data shows that far too many families, whether new or existing home owners, are cost-burdened, with policymakers at all levels of government needing to focus on delivering regulatory relief and easing supply-side headwinds.
  • The largest historical gap between existing and new home prices was recorded in the second quarter of 2025, with existing home prices rising 7% during this period.
  • The CHI breaks down the percentage of a family's income needed to make a mortgage payment on an existing home in 175 metropolitan areas based on the local median home price and median income.
  • In 10 out of 175 markets, the typical family is severely cost-burdened (must pay more than 50% of their income on a median-priced existing home).

Statistics:

  • A family earning the nation's median income of $104,200 needed 36% of its income to cover the mortgage payment on a median-priced new home in the second quarter of 2025.
  • Low-income families would have to spend 71% of their earnings to pay for a median-priced new home in the second quarter of 2025.
  • Existing home prices rose 7% in the second quarter of 2025, causing the share of income needed to pay for an existing home to increase from 35% to 37% for a typical family and from 70% to 74% for a low-income family.
  • The largest historical gap between existing and new home prices was recorded in the second quarter of 2025, with existing home prices exceeding new home prices by the largest margin ever recorded.
  • The CHI data shows that 10 out of 175 markets have a severe cost burden (must pay more than 50% of their income on a median-priced existing home), while 85 other markets have a cost burden (need to pay between 31% and 50%).
  • In the second quarter of 2025, the median new home price was $410,800, while the median existing home price was $429,400.

Sources:

  • "Cost of Housing Index," National Association of Home Builders (NAHB)/Wells Fargo (2025)
  • "HUD's REAC Technical Tools: Affordability Data," U.S. Department of Housing and Urban Development (no date)
  • "Cost Burden Analysis," U.S. Department of Housing and Urban Development (no date)