The National Association of Homebuilders reports that the vast majority of households in the U.S., 69 percent, cannot afford to buy a new median priced home. The NAHB’s report, released last week, found that 87.5 million households are unable to qualify for a loan to afford a new home because their incomes aren’t high enough.
The median price of a new home is currently $412,506. With interest, taxes and insurance, it is estimated that $99,205 of income per year is required to qualify for a loan of this amount. Should the median price of a newly constructed home increase by just $1,000, it could knock an additional 117,932 out of the affordability range to qualify for a mortgage.
The cost of new homes has risen steadily over the last few years as demand exceeds the rate at which homes are being built and builders pass off the rising cost of labor and materials on to consumers.
Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 3.875 percent and 15-year rates are near 3.125 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.biz, social media (#AramcoReport), or over the phone at (877) 700-0942 and your questions may be featured in an upcoming article.