by Data shows that many are spending more on a mortgage payment than the recommended 28% or less of one’s income
WASHINGTON — Housing affordability remains a challenge as higher mortgage rates and ongoing economic uncertainty continue to impact consumers’ ability to purchase a home.
These and other insights are among the findings in the recently released National Association of Home Builders/Wells Fargo Cost of Housing Index.
The CHI noted that data from the first quarter of this year shows that a family earning a median income of $106,800 would need 32% of its income to make a mortgage payment on a median-priced new home. Low-income families making only half the median income would need to devote 65% of their earnings for the same home.
The same figures hold true for existing homes, the report noted.
Financial experts recommend that no more than 28% of gross monthly income be spent on a mortgage. Thus, many people are spending higher than the recommended amount, leaving less in the budget for necessities such as furniture.
The median sales price for a new home was $422,500 in April, 8% over the March 2026 price of $391,100 and 2.2% above the April 2025 price of $413,600, according to figures released Thursday, May 28.
By comparison, the median existing home price in April was $417,700, .9% above the median price of $414,000 in April 2025, according to the National Association of Realtors.
“Homebuyers continue to grapple with elevated mortgage rates and economic uncertainty while homebuilders are dealing with rising construction costs, excessive regulations and labor shortages,” said NAHB Chairman Bill Owens, a homebuilder and remodeler from Worthington, Ohio. “Policymakers need to address these supply-side challenges to enable builders to increase the nation’s housing supply.”
The report noted some improvement in affordability as 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. Meanwhile, the CHI for low-income families fell from 67% to 65% during the same period.
It said that affordability for existing homes also improved, with the share of income needed to pay for an existing home falling from 34% to 32% for a typical family and from 69% to 65% for a low-income family during the same period.
The report said that HUD defines cost-burdened families as those “who pay more than 30% of their income for housing.” A severe cost burden is defined as paying more than 50% of one’s income on housing.
NAHB Chief Economist Robert Dietz said that the first quarter data shows that “far too many families remain cost burdened even as housing affordability is trending in the right direction.”
“A nationwide housing shortage of roughly 1.2 million units continues to exacerbate housing affordability challenges,” he added. “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 report also identified the top most severely cost-burdened markets for an existing home and the least-burdened for an existing home in the U.S. based on a survey of 175 metropolitan areas.
The Top 5 Severely Cost-Burdened Markets
+ San Jose-Sunnyvale and Santa Clara, California, was the most severely cost burdened with 79% of a family’s income needed to make a mortgage payment on an existing home. Others in the Top 5 were:
+ Urban Honolulu, Hawaii (68%)
+ San Diego-Chula Vista-Carlsbad, California (65%)
+ San Francisco-Oakland-Fremont, California (63%)
+ Naples-Marco Island, Florida (58%)
The report said that 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
+ Decatur, Illinois, was the least cost-burdened with families needing to spend just 12% of their income for a mortgage on an existing home. It was followed by:
+ Peoria, Illinois (15%)
+ Elmira, New York (16%)
+ Springfield, Illinois (17%)
+ Davenport-Moline-Rock Island, Iowa-Illinois (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.
