US Median Income Household Needed 38% of Income for Mortgage Payments in Q4

On Thursday, the National Association of Home Builders (NAHB) released its NAHB/Wells Fargo Cost of Housing Index (CHI) for Q4.

The CHI showed that a family earning the nation’s median household income of $97,800 needed 38% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of the median income, would have to spend 76% of their earnings to pay for the same new home.

The CHI figures track closely for the purchase of existing homes in as well. A typical family would have to pay 37% of their income for a median-priced existing home, while a low-income family would need to pay 74% of their earnings to make the same mortgage payment.

The report notes that there was no change in the percentage of a family’s income needed to purchase a new home (38%) between Q3 and Q4. However, the cost burden did increase slightly for low-income families, rising from 75% to 76% of their income.

Meanwhile, the cost burden of existing homes edged lower for both median- and low-income families between Q3 and Q4. The CHI indices were 37% and 74%, respectively, in Q4, down from 38% and 75% in Q3. The slight uptick in affordability was due to median existing-home prices falling 2% from the Q3 to Q4.