US Housing Affordability Worsens in Q2 as Mortgage Rates and Home Prices Rise

According to the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI), US housing affordability worsened in Q2 after three consecutive quarters of modest improvement, as higher mortgage rates, rising construction costs, and economic uncertainty weighed on the housing market.

A family earning the national median income of $106,800 needed 34% of its income to cover the mortgage payment on a median-priced new home in Q2, up from 32% in Q1. A low-income family—defined as earning 50% of median income—needed 67% of its earnings to cover the same payment, up from 65%.

The deterioration came as the average 30-year mortgage rate rose to 6.51% from 6.20% in Q1, while the median new-home price increased 2% to $410,700 from $403,200.

Affordability was even weaker for existing homes, with a typical family needing 36% of its income to cover the mortgage payment on a median-priced home and a low-income family needing 71%. The median existing-home price rose 8% in Q2 to $434,900 from $404,300 in the previous quarter, NAHB reported.