Housing Affordability Edges Up in First Quarter but Challenges Persist

While housing affordability remains out of reach for millions of Americans, particularly first-time and entry-level buyers, conditions have improved modestly in the last year, 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 first quarter of 2026 show that a family earning the nation's median income of $106,800 needed 32% 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 65% of their earnings to pay for the same new home.

The figures are identical for the purchase of existing homes in the U.S. A typical family would have to pay 32% of their income for a median-priced existing home while a low-income family would need to pay 65% of their earnings to make the same mortgage payment.

"While affordability for both new and existing homes saw modest improvement over the past year, home buyers continue to grapple with elevated mortgage rates and economic uncertainty while home builders are dealing with rising construction costs, excessive regulations and labor shortages," said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. "Policymakers need to address these supply-side challenges to enable builders to increase the nation's housing supply."

"The first quarter CHI data shows that far too many families remain cost-burdened even as housing affordability is slowly trending in the right direction," said NAHB Chief Economist Robert Dietz. "A nationwide housing shortage of roughly 1.2 million units continues to exacerbate housing affordability challenges. Policymakers at all levels of government must focus on eliminating obstacles that are preventing builders from building more homes, such as easing burdensome regulations, speeding up permit approval times and providing resources for skilled labor training."

The inversion between new and existing home prices over the past year has essentially ended as the median prices for new and existing homes in the first quarter of 2026 were nearly the same at $403,200 and $404,300, respectively. By contrast, a median-priced existing home sold for 5% more than a new home in the second quarter of 2025. The gap steadily narrowed over the next three quarters to 4% in the third quarter of 2025, 2% in the final quarter of 2025 and 0% in the first quarter of this year. The convergence of prices is due to builders continuing to shift their production toward less expensive homes while existing home sellers have had to cut their listing prices to attract buyers amid heightened economic uncertainty.

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 first quarter is based on a national median new home price of $403,200 and median income of $106,800. The first quarter median new home price is down slightly from $405,300 in the fourth quarter of 2025. Meanwhile, the corresponding price for an existing home fell more sharply in the first quarter to $404,300 from $414,900 in the previous quarter. The average 30-year mortgage rate edged slightly lower from 6.32% in the fourth quarter to 6.20% in the first quarter.

The percentage of a family's income needed to purchase a new home fell from 34% in the fourth quarter to 32% in the first quarter, while the low-income CHI fell from 67% to 65% over the same period.

Affordability of existing homes also improved for both median- and low-income families between the fourth and first quarters as median existing home prices fell 2.6% during this period. The share of income needed to pay for an existing home fell from 34% to 32% for a typical family and from 69% to 65% 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 seven out of 175 markets in the first quarter, the typical family is severely cost-burdened (must pay more than 50% of their income on a median-priced existing home). In 59 other markets, such families are cost-burdened (need to pay between 31% and 50%). There are 109 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 79% of a typical family's income is needed to make a mortgage payment on an existing home. This was followed by:

• Urban Honolulu, Hawaii (68%)
• San Diego-Chula Vista-Carlsbad, Calif. (65%)
• San Francisco-Oakland-Fremont, Calif. (63%)
• Naples-Marco Island, Fla. (58%)

Low-income families would have to pay between 115% and 158% 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 cost-burdened markets on the CHI, where typical families needed to spend just 12% of their income to pay for a mortgage on an existing home. Rounding out the least burdened markets are:

• Peoria, Ill. (15%)
• Elmira, N.Y. (16%)
• Springfield, Ill. (17%)
• Davenport-Moline-Rock Island, Iowa-Ill. (18%)

Low-income families in these markets would have to pay between 25% and 37% of their income to cover the mortgage payment for a median-priced existing home.

Visit nahb.org/chi for tables and details.