VOL 2024 ISSUE 8
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VOL 2024 ISSUE 8
BUILDERSOUTLOOK
PUBLISHED BY THE EL PASO ASSOCIATION OF BUILDERS : NATIONAL , STATE AND LOCAL HOME BUILDING INDUSTRY NEWS
Median-Priced Existing Homes Less Affordable Than New Homes
As a result of limited resale inventory and measures by home builders to increase housing affordability , the median price on an existing home in the United States during the second quarter of 2024 was higher than that of a new home . Therefore , a family needed to spend more of their income to buy a typical existing home than a typical newly built home .
The National Association of Home Builders ( NAHB )/ Wells Fargo Cost of Housing Index ( CHI ) found that in the second quarter of 2024 , a family earning the nation ’ s median income of $ 97,800 needed 38 % of its income to cover the mortgage payment on a median-priced new home . The median price of a new home in the second quarter was $ 412,300 vs . the $ 422,100 price for a median existing home , therefore the share of income needed to buy a typical existing home was higher , at 39 %.
“ With the nation facing a housing affordability crisis , additional , attainable housing supply is the only way to sustainably ease housing cost burdens for American families ,” said NAHB Chairman Carl Harris , a custom home builder from Wichita , Kan . “ NAHB ’ s 10-point plan to tackle the housing affordability crisis gets at the heart of the problem , which is addressing impediments such as excessive regulations , inefficient zoning local zoning rules and permitting roadblocks that prevent builders from increasing the nation ’ s housing supply .”
The CHI also found that low-income families , defined as those earning only 50 % of the median income , would have to spend 77 % of their earnings to pay for a median-priced new single-family home in the second quarter .
The index debuted in the first quarter of this year , and there was no change in the percentage of a family ’ s income needed to purchase a new home ( 38 %) between the first and second quarters of 2024 , and the income percentage for low-income families remained the same in both quarters as well ( 77 %).
However , those seeking to purchase existing homes in the U . S . found their costs rising in the second quarter . A typical family needed 39 % of their income to pay for a median-priced existing home in the second quarter , up from 36 % in the first quarter . A low-income family needed 79 % of their income vs . 71 % in the previous quarter .
“ While interest rates are expected to gradually move lower in the coming quarters , home price growth will likely slow as inventory levels rise and prospective buyers continue to experience challenging affordability conditions ,” said NAHB Chief Economist Robert Dietz .
The NAHB / Wells Fargo Cost of Housing Index ( CHI ) The CHI is a quarterly analysis of housing costs in the U . S . and at the metropolitan area level . The CHI represents the share of a typical family ’ s income needed to make a typical mortgage payment . The mortgage payment is calculated by taking median home prices , assuming a 10 % down payment , and adding taxes , insurance and PMI . Median family income is published by the Department of Housing and Urban Development . A lowincome CHI is also calculated for families earning only 50 % of the area ’ s median income .
The CHI breaks down the percentage of a family ’ s income needed to make a mortgage payment on an existing home in 176 metropolitan areas based on the local median home price and median income . Percentages are also calculated for low-income families in all of these markets . The same data on median-priced new single-family homes is only available on a national level .
In 14 out of 176 markets in the second quarter , the typical family is severely costburdened ( must pay more than 50 % of their income on a median-priced existing home ). In 89 other markets , such families are costburdened ( need to pay between 31 % and 50 %). There are 73 markets where the CHI is 30 % of earnings or lower .
The Top 5 Severely Cost-Burdened Markets
San Jose-Sunnyvale-Santa Clara , Calif ., was the most severely cost-burdened market on the CHI during the second quarter , where 94 % of a typical family ’ s income is needed to make a mortgage payment on an existing home . This was followed by :
• San Francisco-Oakland-Berkeley , Calif . ( 79 %)
• San Diego-Chula Vista-Carlsbad , Calif . ( 76 %)
• Urban Honolulu , Hawaii ( 76 %)
• Naples-Marco Island , Fla . ( 74 %) Low-income families would have to pay between 147 % and 188 % of their income in all five of the above markets to cover a mortgage . The Top 5 Least Cost-Burdened Markets By contrast , Decatur , Ill ., was the least costburdened markets on the CHI , where families needed to spend just 15 % of their income to pay for a mortgage on an existing home . Rounding out the least burdened markets are :
• Cumberland , Md . -W . Va . ( 17 %)
• Springfield , Ill . ( 18 %)
• Elmira , N . Y . ( 18 %)
• Peoria , Ill . ( 19 %)
• Binghamton , N . Y . ( tied at 19 %) Low-income families in these markets would have to pay between 30 % and 39 % of their income to cover the mortgage payment for a median-priced existing home .
Please visit nahb . org / chi for tables and details .