Falling Trends Of Affordability For New Homes
Summary
- October 2021 saw the median new home sale price in the United States rise to a record 5.56 times the median household income.
- 30-year conventional mortgage rates rose in October 2021. At an average 3.07% during the month, they are nearly 0.4% higher than their record low from December 2020.
- The mortgage payments for a median new home rose to 29.0% of median household income in October 2021.
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October 2021 saw the median new home sale price in the United States rise to a record 5.56 times the median household income. Consequently, the relative raw affordability of new homes fell to an all-time low as rising new home prices once again outpaced the growth of median household income:
30-year conventional mortgage rates rose in October 2021. At an average 3.07% during the month, they are nearly 0.4% higher than their record low from December 2020.
Combined with the rising median sale price of new homes, mortgage payments for a typical new home sold as a percentage of median household income also became less affordable in October 2021.
The mortgage payments for a median new home rose to 29.0% of median household income in October 2021. That's up from the low of 24.5% recorded at the bottom of the Coronavirus Recession in April 2020.
References
U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 24 November 2021.
Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 24 November 2021.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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