NAHB: New and Existing Homes Remain Largely Unaffordable in Second Quarter

While new homes remain largely unaffordable, builder efforts to improve housing affordability paid dividends in the second quarter of 2025, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI). The CHI results from the second quarter of 2025 show that a family earning the nation’s median income of $104,200 needed 36% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of median income, would have to spend 71% of their earnings to pay for the same new home.

The figures are somewhat higher for the purchase of existing homes in the U.S., showing that it took more income to buy an existing home. 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.

“While the housing affordability crisis persists, builders have been working diligently to make new homes more affordable by reducing square footage, lowering prices and offering a host of buyer incentives,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “The Cost of Housing Index shows these efforts have moved the needle in the right direction, but much more needs to be done on the policy front to reduce regulatory burdens, address construction labor shortages and ease building material supply chains to allow builders to increase the nation’s housing supply.”

“The CHI data in the second quarter shows that far too many families, whether new or existing home owners, are cost-burdened,” said NAHB Chief Economist Robert Dietz. “Policymakers at all levels of government need to focus on delivering regulatory relief and easing supply-side headwinds that are impeding builders from boosting housing production.”

The second quarter of 2025 marked the largest historical gap where existing home prices exceeded those of new homes. Different dynamics in the two sectors are responsible for the price divergence. On one hand, builders are offering incentives for smaller homes on smaller lots, with streamlined options and features, and thus shifting their production toward less expensive homes.  Many existing home owners, meanwhile, are locked-in their homes by low mortgage rates, limiting resale inventory, and causing existing home prices to increase.

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 low-income CHI is also calculated for families earning only 50% of the area’s median income.

The U.S. data for the percentage of earnings needed to purchase a new home in the second quarter is based on a national median new home price of $410,800 and median income of $104,200. The second quarter median new home price is down 1% from $416,900 in the first quarter. However, the corresponding price for an existing home in the second quarter rose to $429,400 from $402,300 in the previous quarter. The average 30-year mortgage rate edged slightly lower from 6.91% in the first quarter to 6.88% in the second quarter.

The percentage of a family’s income needed to purchase a new home was unchanged at 36% from the first to the second quarter, while the low-income CHI fell from 72% to 71% over the same period.

Affordability of existing homes, on the other hand, edged lower for both median- and low-income families between the first and second quarters as median existing home prices rose 7% during this period. The share of income needed to pay for an existing home rose from 35% to 37% for a typical family and from 70% to 74% for a low-income family during this period.

HUD defines cost-burdened families as those “who pay more than 30% of their income for housing” and a severe cost burden is defined as paying more than 50% of one’s income on housing.

The CHI breaks down the percentage of a family’s income needed to make a mortgage payment on an existing home in 175 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.

In 10 out of 175 markets in the second quarter, the typical family is severely cost-burdened (must pay more than 50% of their income on a median-priced existing home). In 85 other markets, such families are cost-burdened (need to pay between 31% and 50%). There are 80 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, where 93% of a typical family’s income is needed to make a mortgage payment on an existing home. This was followed by:

• Urban Honolulu, Hawaii (73%)
• San Francisco-Oakland-Fremont, Calif. (72%)
• San Diego-Chula Vista-Carlsbad, Calif. (67%)
• Naples-Marco Island, Fla. (60%)
• Miami-Fort Lauderdale-Palm Springs, Fla. (60%)

Low-income families would have to pay between 119% and 186% of their income in all six of the above markets to cover a mortgage.

The Top 5 Least Cost-Burdened Markets

By contrast, Decatur, Ill., was the least cost-burdened markets on the CHI, where typical families needed to spend just 17% of their income to pay for a mortgage on an existing home. Rounding out the least burdened markets are:

• Elmira, N.Y. (18%)
• Peoria, Ill. (19%)
• Davenport-Moline-Rock Island, Iowa-Ill. (19%)
• Binghamton, N.Y. (19%)

Low-income families in these markets would have to pay between 33% and 38% of their income to cover the mortgage payment for a median-priced existing home.

Visit nahb.org/chi for tables and details.

Contacts:

Elizabeth Thompson – AVP, Media Relations – ethompson@nahb.org – (202) 266-8495

Source: National Association of Home Builders