Typical Family Needs to Spend 38% of Income on House Payments, Cost of Housing Index Shows
Families Must Spend 38% of Their Income on House Payments
The National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI), released on Thursday, reported that a family earning a median income of $97,800 needed 38% of their income to cover the mortgage payment on a median-priced new home in Q3. Low-income families, defined as those earning only 50% of the median income, would have to spend 75% of their earnings to pay for the same new home.
NAHB notes that the figures track identically for the purchase of existing homes. A typical family would have to pay 38% of their income for a median-priced existing home, while a low-income family would need to pay 75% of their earnings to make the same mortgage payment.
There was no change in the share of a family’s income needed to purchase a new home, 38% between Q2 and Q3, but affordability did improve slightly for low-income families, with the CHI falling from 77% to 75%.
On the other hand, affordability of existing homes edged higher for both median- and low-income families between Q2 and Q3. The Cost of Housing Indices were 38% and 75% in Q3 versus 39% and 79%, respectively, in Q2.
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