WASHINGTON, D.C. – RealEstateRama – Though new and existing homes remain largely unaffordable, the needle moved slightly in the right direction in the second half of 2025, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI). The CHI results from the fourth quarter of 2025 show that a family earning the nation’s median income of $104,200 needed 34% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of median income, would have to spend 67% of their earnings to pay for the same new home.
Data for the CHI’s final two quarters of 2025 were delayed because of last fall’s government shutdown, but the figures indicate a slight improvement in affordability. In the last three quarters of 2025, the income share needed to buy a new home declined from 36% in the second quarter, to 35% in the third quarter and 34% in the final quarter of 2025.
The same trend holds true for existing homes. A typical family would have to pay 37% of their income for a median-priced existing home in the second quarter, 36% in the third quarter and 34% in the final three months of 2025. A low-income family would need to pay 69% of their earnings to make the same mortgage payment on an existing home in the fourth quarter.
“As the housing affordability crisis continues, builders have been steadfastly working to tackle this challenge head-on by constructing smaller homes, reducing prices and offering other sales incentives,” said Bill Owens, a builder and remodeler from Worthington, Ohio. “While these efforts have produced modestly positive results, much work remains to be done on the policy front to eliminate regulatory and financial obstacles and reduce rising labor and material prices that are preventing builders from boosting housing production.”
“While existing homes remain more expensive than new homes, that inversion of typical trends is closing,” said NAHB Chief Economist Robert Dietz. “A typical existing home sold for 5% more than a typical new home in the second quarter, 4% more in the third quarter and just 2% more in the fourth quarter of 2025. Median new home pricing has declined nearly 15% since late 2022 due to builder-enacted price cuts, a small decline in typical new home size and a geographic shift for construction to lower cost areas such as the Midwest. Existing home prices will be under downward pressure in 2026 due to ongoing housing affordability challenges.”
The CHI is a quarterly analysis of housing costs in the U.S. and at the metropolitan area level. The CHI represents the share of a typical family’s income needed to make a typical mortgage payment. The mortgage payment is calculated by taking median home prices, assuming a 10% down payment, and adding taxes, insurance and PMI. Median family income is published by the Department of Housing and Urban Development. A low-income CHI is also calculated for families earning only 50% of the area’s median income.
The U.S. data for the percentage of earnings needed to purchase a new home in the fourth quarter is based on a national median new home price of $405,300 and median income of $104,200. The fourth quarter median new home price is down 1.2% from $410,100 in the third quarter. The corresponding price for an existing home in the fourth quarter fell to $414,900, 2.8% down from $426,800 in the previous quarter. The average 30-year mortgage rate moved lower from 6.65% in the third quarter to 6.32% in the fourth quarter.
HUD defines cost-burdened families as those “who pay more than 30% of their income for housing” and a severe cost burden is defined as paying more than 50% of one’s income on housing.
The CHI breaks down the percentage of a family’s income needed to make a mortgage payment on an existing home in 175 metropolitan areas based on the local median home price and median income. Percentages are also calculated for low-income families in all of these markets.
In eight out of 175 markets in the fourth quarter, the typical family is severely cost-burdened (must pay more than 50% of their income on a median-priced existing home). In 69 other markets, such families are cost-burdened (need to pay between 31% and 50%). There are 98 markets where the CHI is 30% of earnings or lower.
The Top 5 Severely Cost-Burdened Markets
San Jose-Sunnyvale-Santa Clara, Calif., was the most severely cost-burdened market on the CHI, where 80% of a typical family’s income is needed to make a mortgage payment on an existing home. This was followed by:
- Urban Honolulu, Hawaii (69%)
- San Francisco-Oakland-Fremont, Calif. (63%)
- San Diego-Chula Vista-Carlsbad, Calif. (62%)
- Barnstable Town, Mass. (56%)
- Miami-Fort Lauderdale-West Palm Beach, Fla. (56%)
- Naples-Marco Island, Fla. (56%)
Low-income families would have to pay between 111% and 159% of their income in all seven of the above markets to cover a mortgage.
The Top 5 Least Cost-Burdened Markets
By contrast, many of the least cost-burdened markets were located in Illinois. In the top five least cost-burdened markets, typical families needed to spend just 16-18% of their income to pay for a mortgage on an existing home. These markets are:
- Decatur, Ill. (16%)
- Elmira, N.Y. (16%)
- Springfield, Ill. (17%)
- Peoria, Ill. (17%)
- Davenport-Moline-Rock Island, Iowa-Ill. (18%)
Low-income families in these markets would have to pay between 32% and 36% of their income to cover the mortgage payment for a median-priced existing home.
Visit nahb.org/chi for tables and details
Contacts:
Elizabeth Thompson
AVP, Media Relations
(202) 266-8495
Stephanie Pagan
Director, Media Relations
(202) 266-8254
