REIT - Relative Affordability Of U.S. New Homes Holds Near Record Low
Summary
- Data revisions affecting median new home sale prices and median household income confirm October 2022 as the all-time record low for the affordability of new homes in the U.S.
- Mortgage payment on the median new home sold in the U.S. during December 2022 would consume 41.6% of the monthly income earned by the typical American household.
- The period from July through December 2022 represents the least affordable for Americans in history.
The relative affordability of the typical new home sold in the U.S. remained near its all time lows in December 2022. That outcome occurred despite new home sale prices and mortgage rates falling during the month.
Meanwhile, data revisions affecting median new home sale prices and median household income confirm October 2022 as the all-time record low for the affordability of new homes in the U.S. The revised data also confirms the new homes were even less affordable than the previous estimate indicated. The following chart shows that a mortgage payment on the median new home sold in the U.S. during December 2022 would consume 41.6% of the monthly income earned by the typical American household, down from the record of 49.3% recorded for this measure in October 2022.
The period from July through December 2022 represents the least affordable for Americans in history. All but one month during this time exceeds the peak of unaffordability recorded for April 2006 during the first U.S. housing bubble.
References
U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [ Excel Spreadsheet ]. Accessed 26 January 2023.
U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [ Excel Spreadsheet ]. Accessed 26 January 2023.
Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [ Online Database ]. Accessed 5 February 2023. Note: Starting from December 2022, the estimated monthly mortgage rate is taken as the average of weekly 30-year conventional mortgage rates recorded during the month.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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Relative Affordability Of U.S. New Homes Holds Near Record Low