A new quarterly Cost of Housing Index (CHI) highlights the burden that housing costs represent for middle and low-income families. In its inaugural release for the first quarter of 2024, CHI revealed that a typical family in the U.S. must spend 38% of its income to cover the mortgage payment on a median priced new single-family home. Low-income families, defined as those earning only 50% of median income, would have to spend 77% of their earnings to pay for the same new home.
The figures track closely for the purchase of existing homes in the U.S. as well. A typical family would have to pay 36% of its income for a median-priced existing home, while a low-income family would need to pay 71% of its earnings to make the same mortgage payment.
CHI results in the first quarter are based on a national median new home price of $420,800 and median income of $97,800. The corresponding price for an existing home is $389,400.
Additionally, 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 these markets.
In eight out of 176 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 80 other markets, such families are cost-burdened (need to pay between 31% and 50%). There are 88 markets where the CHI is 30% of earnings or lower.
The Top Five Severely Cost-Burdened Markets
San Jose-Sunnyvale-Santa Clara, Calif. was the most severely cost-burdened market on the CHI, where 84% 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%)
•          Naples-Marco Island, Fla. (71%)
•          San Diego-Chula Vista-Carlsbad, Calif. (70%)
•          San Francisco-Oakland-Berkeley, Calif. (69%)
Low-income families would have to pay between 138% and 168% of their income in all five of the above markets to cover a mortgage.
The Top Five Least Cost-Burdened Markets
By contrast, Peoria and Decatur, Ill. tied as the least cost-burdened markets on the CHI, where families needed to spend just 14% of their income to pay for a mortgage on an existing home. Rounding out the least burdened markets are:
•          Cumberland, Md.-W.Va (15%)
•          Springfield, Ill. (16%)
•          Elmira, N.Y. (16%)
Low-income families in these markets would have to pay between 28% and 32% of their income to cover the mortgage payment for a median-priced existing home.
Visit nahb.org/chi for tables and details.
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