US Housing Affordability Challenges Persist Despite Lower Home Prices and Income Gains

According to the latest National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI), Americans continue to face significant housing affordability challenges, despite solid income growth and modest declines in home prices.

In Q1, a family earning the median income of $104,200 would need to spend 36% of that income on the mortgage for a median-priced new home. For low-income families—those earning just 50% of the median—housing costs would consume 72% of their income for the same home.

Affordability challenges are similar for existing homes. A median-income family would need to allocate 35% of its income to afford a median-priced existing home, while a low-income family would face a 70% burden.

However, affordability improved modestly compared to the previous quarter. The share of income needed to buy a new home fell from 38% in 2024Q4 to 36% in Q1, driven by a 6.5% increase in median income and a 1% drop in new home prices. For low-income buyers, the CHI declined from 76% to 72%.

Affordability also improved slightly for existing homes. In Q1, CHI readings were 35% for median-income buyers and 70% for low-income buyers, down from 37% and 74%, respectively, in 2024Q4. These gains reflect higher incomes and a 2% decrease in median existing-home prices.