$1,000 Makes a Big Difference in Housing Affordability
A small uptick in home prices or mortgage rates can have a big impact on housing affordability.
The latest study from NAHB determined that for every $1,000 increase in the cost of today’s median U.S. home price, 158,857 American households are “priced out” and would no longer be able to afford it. In other words, based on their incomes, 158,857 households would be able to qualify for a mortgage to purchase the home before the price increase, but not afterward.
Those numbers are even more staggering when looking at potential interest rate increases. It takes only a quarter-point rise in the rate for a 30-year fixed-rate mortgage to price approximately 1.3 million households out of that segment of the market and force them to set their sights lower than a median-priced home –- or delay their home purchase altogether.
More details, including priced out estimates for every state and over 300 metropolitan areas, and a description of the underlying methodology, are available in the full study.
NAHB economist Na Zhao provides further analysis in this Eye on Housing blog post.