If you've been paying attention to home prices, this isn't news, but new homes are becoming less affordable for the typical American household.
In March 2020, the price of the typical new home sold in the U.S. rose to be 5.14 times the typical income of an American household.
Historically, there have been two periods where new homes have been more unaffordable with respect to median household income. The first was at the peak of the housing bubble in 2006. The second is the period from 2014 through 2018.
We anticipate the rise in the relative affordability ratio will decelerate because the supply of new homes being sold in the U.S. is rising rapidly, with the overall number now at levels last seen during the early part of the Dot-Com Bubble.
With the rising supply, median new home sale prices have declined since peaking in December 2020, though there is still momentum behind the increase in unaffordability for now.
References
Political Calculations. Median Household Income in March 2021. [Online Article]. 4 May 2021.
U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 24 April 2021.
U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 24 April 2021.
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