The average mortgage payment on the typical new home sold in the U.S. rose above the upper limit of affordability for the typical American household in May 2026.

The change comes eight months after the affordability of the median new home had finally become affordable for households earning the median household income for the first time since March 2022. A combination of rising mortgage rates and rising new home prices are responsible for the development. Both have increased since bottoming at their most affordable levels in years in March 2026.

Here are the three numbers that define how affordable a new home is for the typical American household:

• Median new home sale price: $424,900
• Median household income: $87,646
• Average 30-year conventional fixed mortgage rate: 6.44%

Median household income also increased during this time, but not by enough to offset the impact of the other two factors. For a household at the exact middle of the U.S. income spectrum, the average mortgage payment for a new home purchased at the national median sale price with zero-percent down consumed 36.6% of the household's monthly income in May 2026.

This value is higher than the upper threshold of affordability defined by the 28/36 rule that mortgage lenders traditionally use to determine whether to extend a mortgage to new home buyers. A monthly mortgage payment that consumes more than 36% of a household's income means that the median new home sold in May 2026 is outside the affordable reach of a household earning the median income, even if it has no other debts.

The following chart shows how May 2026's level of relative affordability for new homes compares with the affordability for every month since January 2000:

Looking forward, the average interest rate for a 30-year conventional fixed rate mortgage increased to 6.49% in June 2026. This increase creates additional headwinds for new home affordability in the United States.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 24 July 2026.

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 24 July 2026.

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 1 August 2026. 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 calendar month.

Image Credit: Microsoft Bing Image Generator. Prompt: "An editorial cartoon of an American family looking sadly at a new house with a "For Sale" sign in front of it that they cannot afford." We modified the generated image to add text to the label on the "For Sale" sign.

The U.S. new home market continued stumbling along in May 2026.

Political Calculations' initial estimate of the total value of new home sales in the United States during May 2026 is $28.62 billion. This value is slightly higher than the initial estimate of $28.30 billion for April 2026, which has been revised downward to $28.18 billion for this month.

This estimate rose largely because average new home sale prices have been rising, which have offset a falling number of sales in recent months as mortgage rates in the United States increased to near their highest levels in the past year:

The contract rate on a 30-year, fixed-rate mortgage — the most common U.S. home loan — climbed 7 basis points to 6.76% in the week ended July 24, just shy of a one-year high, the Mortgage Bankers Association said on Wednesday. The rate on 15-year, fixed-rate loans climbed 11 basis points to 6.15%, the highest in just over a year.

Meanwhile, rates on adjustable-rate mortgages, which can be a more affordable option in the face of high fixed-rate costs but come with the risk of a higher rate reset later on, also moved higher. The rate on a 5-year ARM edged up to 5.98% last week.

Looking at the big picture for the U.S. new home market, the following charts present the U.S. new home market capitalization, the number of new home sales, and their average sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through May 2026.

New home sales trending downward:

Rising trend for new home prices:

We'll take a closer look at the impact these factors are having on the relative affordability of new homes being sold in the U.S. in the next week.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 24 July 2026. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 24 July 2026. 

Image Credit: Construction worker in hard hat on a building frame photo by Josh Olalde on Unsplash.

New homes are back at the upper threshold of affordability for the typical American household.

That comes one month after new homes reached their most affordable level of the last four years. Higher mortgage rates and a higher sale price for the typical new home sold in the U.S. pushed new homes back up to the upper affordability threshold for the typical American household.

Here are the driving numbers behind that assessment:

• Median new home sale price: $422,500
• Median household income: $87,444
• Average 30-year conventional fixed mortgage rate: 6.33%

For a household at the exact middle of the U.S. income spectrum, the average mortgage payment for a new home purchased at the national median sale price with zero-percent down would consume 36% of the household's monthly income in April 2026.

This value sits at the upper affordability threshold mortgage lenders traditionally use to determine whether to extend a mortgage to new home buyers. Set by the 28/36 rule, an monthly mortgage payment that consumes 36% of a household's income means that the median new home sold in April 2026 is something that a household earning the U.S. median income can just barely afford, provided they have no other debts.

The following chart illustrates how April 2026's level of relative affordability for new homes compares with the affordability for every month since January 2000:

While the average 30-year conventional fixed rate mortgage ticked up from 6.18% to 6.33% from March to April 2026, the increase in the median new home sale price from a revised level of $391,100 in March to $422,500 played a larger role in making new homes more unaffordable during the month.

Looking forward to May 2026, the average interest rate for a 30-year conventional mortgage continued increasing, rising to 6.44%. Since we expect median household income will continue increasing, whether new homes move back toward greater affordability or become less affordable in May 2026 will hinge on how their median sale price changes.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 28 May 2026.

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 28 May 2026.

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 11 May 2026. 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 calendar month.

Image credit: Hand holding a green key to a house photo by Jakub Żerdzicki on Unsplash.

The U.S. new home market has largely recovered from the disruption of January 2026's blizzards. Unfortunately, rising mortgage rates combined with an uptick in the average sale price of new homes to reduce the quantity of sales. This combination of factors resulted in the total valuation of new homes sold in April 2026 to decline below the levels recorded a month earlier.

Political Calculations' initial estimate of the total value of new home sales in the United States during April 2026 is $28.30 billion. This value is slightly higher than the initial estimate of $28.24 billion for March 2026, but has declined from a revised value of $28.43 billion for the month.

The number of new home sales continues to hold relatively steady. The initial estimate of the annualized trailing twelve month average of the total number of new home sales for April 2026 is 665,000. This value falls below the range of 671,000 and 684,000 that had held since January 2024.

The initial estimate of the trailing twelve month average of a new home sold in April 2026 is $521,300. New home prices have generally rising since bottoming at $502,525 in September 2024. The average remains below the peak of $529,692 recorded for June 2022 at the height of the high inflation unleashed by the Biden administration.

All these figures represent time-shifted, partial trailing twelve month averages for each data series, which will be subject to revision for the next ten months before being finalized. The following charts present the U.S. new home market capitalization, the number of new home sales, and their average sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through April 2026.

Declining trend for new home sales:

Rising trend for new home prices:

New home sales were reported to have surged in March as prices fell to a five-year low, but much of this boost in sales may represent a springback from the impact of blizzards in much of the U.S. in January 2026 that shrank sales far below expectations.

Bloomberg confirms the April 2026 sales slump for new homes was not expected:

Sales of new US homes declined in April by more than forecast as builder incentives failed to motivate potential buyers at the start of the spring selling season.

Purchases of new single-family homes decreased 6.2% from March to a 622,000 annualized pace, according to government data released Thursday. Economists expected a 660,000 rate, based on the median estimate in a Bloomberg survey.

It would seem the springback in sales from January 2026's blizzards was truly that and not the start of an upward trend.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 28 May 2026. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 28 May 2026. 

Image Credit: High angle shot of suburban neighborhood photo by David McBee on Pexels.

In the United States, when people talk about mortgages, they almost invariably are talking about the 30-year fixed-rate conventional mortgage.

It wasn't always that way. In fact, it wasn't until the Housing Act of 1954 became law that the 30-year fixed rate mortgage became mainstream. The law's "combination of federal insurance and full amortization requirements made the extended timeline financially safe for banks". Soon after, the 30-year fixed rate conventional mortgage became the default for both lenders and home buyers.

But it wasn't until much later that federally-backed agencies like Freddie Mac began keeping regular track of what the average monthly interest rate was for homes bought in the U.S. with these mortgages. As important as they are for prospective American homeowners, the historical data for these mortgages only goes back to April 1971. Freddie Mac, officially known as Federal Home Loan Mortgage Corporation, has maintained weekly data for mortgages extending back to that month. The government-sponsored enterprise also used to report monthly averages for mortgage rates from April 1971 forward, but discontinued the practice after December 2022.

And yet, because housing sales and prices are reported on a monthly basis, it's incredibly useful to have mortgage rates averaged over the period of a month. Since Freddie Mac isn't doing that job any more, we took it over and have made it publicly available.

It's built into the following interactive chart, which we've just updated to visualize 55 years worth of the average monthly interest rates for 30-year conventional mortgages in the U.S.

The average 30-year fixed-rate conventional mortgage was 6.33% in April 2026.

References

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 15 May 2026. 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.

Image credit: Mortgage Payment Due date by alanharder.ca via Wikimedia Commons. Creative Commons Attribution 2.0 Generic (CC BY 2.0).

The affordability of new homes in the U.S. improved in March 2026 as builder incentives to reduce the sale prices of new homes combined with relatively low mortgage rates and a rising income for the typical American household.

The first two of these factors directly reduced the typical mortgage payment for U.S. households, while the third makes the lower cost for owning a new home more affordable by definition for the nation's median income-earning household. Here are the applicable numbers:

• Median new home sale price: $387,400
• Median household income: $87,164
• Average 30-year conventional fixed mortgage rate: 6.18%

For that household at the exact middle of the U.S. income spectrum, the average mortgage payment for a new home purchased at the national median sale price with zero-percent down would consume 32.6% of the household's monthly income in March 2026.

This value falls in between the two major affordability thresholds mortgage lenders have traditionally used in the form of the 28/36 rule to determine whether to extend a mortgage to new home buyers. The following chart shows how March 2026's level of relative affordability for new homes compares with the affordability for every month from January 2000 through March 2026:

In March 2026, buying a new home was the most affordable it has been in the U.S. for a typical American household at any time in the last four years.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 5 May 2026.

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 5 May 2026.

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 11 May 2026. 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 calendar month.

Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a new home buyer speaking with a real estate agent in front of a 'NEW HOME FOR SALE' sign that says 'MEDIAN PRICE MARKED DOWN TO $387,400!'"

The U.S. new home market has largely recovered from the disruption of January 2026's blizzards.

Political Calculations' initial estimate of the total value of new home sales in the United States during February and March 2026 as measured by a time-shifted, partial twelve month trailing average is $28.45 billion and $28.24 billion respectively, which are both up from January 2026's first estimate of $27.37 billion.

Overall, the time-shifted, trailing twelve month average of new home sales in the U.S. is holding fairly steady. The annualized total number of new home sales has ranged between 671,000 and 684,000 since January 2024.

New home prices however have been on a rising trend since bottoming in September 2024. The time-shifted, trailing twelve month average sale price of a new home in the U.S. has risen from $502,525 in September 2024 to $522,950 in March 2026. The average remains below the peak of $529,692 recorded for June 2022 at the height of the high inflation unleashed by the Biden administration.

The following charts present the U.S. new home market capitalization, the number of new home sales, and their average sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through March 2026.

Steady trend for new home sales:

Rising trend for new home prices:

We'll take a separate look at the relative affordability of new homes in the near future.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 5 May 2026. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 5 May 2026. 

Image Credit: Wooden structure under construction photo by Nate Johnston on Unsplash.

In January 2026, new homes built in the United States clocked in at their most affordable level of the last four years.

This assessment is based on the following data points for the month:

• Median new home sale price: $400,500
• Median household income: $86,506
• Average 30-year conventional fixed mortgage rate: 6.10%

Of these three factors, the average 30-year fixed rate mortgage of 6.10% for January 2026 is the biggest contributor to the improvement in affordability. This is the lowest average monthly mortgage rate in the U.S. since September 2022.

At the same time, the median new home sale price of $400,500 ranks as the third-lowest median price recorded for new home prices in any month since July 2021, four months after Biden administration unleashed the high inflation that characterized the former President's term in office.

Meanwhile, median household income has risen to its highest level on record, even after adjusting for inflation.

Overall, these three things combined to make the monthly mortgage payment on a new home purchased at the nation's median sale price fall lower within the range of affordability in January 2026. The mortgage payment of a typical new home purchased in this month by a typical American household would consume 33.7% of its household income. The following chart shows where January 2026's affordability level fits within the data for this measure since January 2000:

Looking forward, the 30-year mortgage rate fell a little further in February 2026, providing a tailwind for affordability of the largest expense most American households have going into the month.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 19 March 2026. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 19 March 2026. 

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 12 April 2026. 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 calendar month.

Image Credit: Wooden family figures and house with keys on table photo by IGOR LOLATTO on Unsplash.

Political Calculations' initial estimate of the total value of new home sales in the United States during January 2026 as measured by a time-shifted, partial twelve month trailing average is $27.37 billion, which is down substantially from December 2025's initial estimate of $30.36 billion.

The raw numbers for January 2026 are even worse. The U.S. Census Bureau's first estimate of the state of January 2026's new home market counted 48,000 non-seasonally adjusted sales at an average price of $499,500, which when multiplied together, rounds up to a total valuation of $23.98 billion.

The reason why isn't much of a surprise since January 2026 featured the largest and most severe winter storms in years. The northeast and midwest regions of the U.S. were very hard hit by the weather, which crashed new home sales in them. Here's how the National Association of Home Builders described the winter storms' impact on new home sales:

Sales of newly built single-family homes fell 17.6% in January, to a seasonally adjusted annual rate of 587,000 from a downwardly revised December reading, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales is down 11.3% from a year earlier....

“New home sales fell in January largely because of weather-related disruptions, even as mortgage rates eased modestly,” said Jing Fu, NAHB senior director of forecasting and analysis.

Political Calculations' estimates are designed to capture the underlying trend in the new home sales. The initial estimate for any given month is based on the U.S. Census Bureau's estimated number of new home sales multiplied by their average price for that month, which is averaged with the data for the preceding six months. These total valuation (or new home market capitalization) estimates are then updated as each new month's data is added to it, until it covers a full twelve months worth of data and as older data is revised, which continues until that data is finalized some 10 months after the month for which the data applies.

The benefit of this approach is that it 'centers' the trailing average in something closer to real time, which makes it easier to identify when changes in trend take place. The disadvantage is that the most recent data is incomplete and will be subject to revision during the next nine months as new estimates are incorporated and older estimates are revised.

The following charts present the U.S. new home market capitalization, the number of new home sales, and their average sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through January 2026.

Flat-to-rising trend for new home sales:

Average new home prices trending higher:

The lack of new home sales is helping contribute to an increase in the supply of new homes. New homebuilders are responding to the situation by offering bigger incentives to new home buyers and lowering prices:

... the inventory of homes for sale rose to a 9.7-month supply, up from eight months in December, according to the U.S. Census. That is 7.8% higher than January 2025.

More supply and less demand led builders to drop prices. The median price of a home sold in January was $400,500, the agency said, a decline of 6.8% year over year. Prices for existing homes are still flat nationally, but builders report increasing incentives to get buyers in the door.

Data from March does not appear to be any better. An estimated 37% of builders cut prices in March, an increase from February’s 36%, according to the National Association of Home Builders.

This continuing weakness suggests the environment is shifting to become more of a buyer's market for new homes in the first quarter of 2026. We'll see how that progresses in the months ahead.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 19 March 2026. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 19 March 2026. 

Image credit: House under construction photo by Ernie Journeys on Unsplash.

What percent of your monthly pre-tax income is consumed by your mortgage payment?

If the result of that math is 36% of your pre-tax income, provided you have no other debt, your home just barely qualifies as being affordable by mortgage lenders. If however your mortgage payment only eats up 28% or less of your gross monthly income, mortgage lenders will view your mortgage payment as being very affordable for you.

Anywhere in between these two percentages, which come from the 28/36 rule that mortgage lenders use to determine how big a mortgage payment a prospective homebuy can afford, your home is considered to be affordable provided it and your total debts don't exceed that upper 36% threshold. Which is to say that if you manage your household's total debt load well, the home you own is within your affordable reach.

In October 2025, the typical new home sold in the United States fell within the affordable reach of the typical American household for the first time since early 2022. New home sales price data for both November and December 2025 that was delayed by the Senate Democrats' government shutdown fiasco in the fourth quarter of 2025 recently became available. That price data, along with the latest median household income estimates for November and December 2025, confirm new homes fall between the 28% and 36% affordability thresholds for a household earning the median household income in those months. For three consecutive months, the cost of the typical new home sold in the U.S. has been within the affordable reach of the typical American household.

The following chart tracks the changing relative affordability of the typical new home sold in the U.S. from January 2000 through December 2025. It visually confirms the cost of owning a new home, while still on the high side, has returned to and stayed within affordable levels.

Falling mortgage rates have been a key part of the rise of affordability in these months. Looking forward, both January and February 2026 have seen the benchmark 30-year conventional fixed rate mortgage continue to fall, dropping below six percent in the final week of February 2026.

We won't get the median new home sale price data for January 2026 until later this month, but the trend of increasing affordability established since early 2025 remains favorable.

Analyst's Notes

The affordability crisis for new homes has its origin in the high inflation that was unleashed by the Biden-Harris administration's policies in March 2021. Although it rose slowly at first, the cost of monthly mortgage payment began to skyrocket after December 2021. As a percentage of median household income, the monthly mortgage payment for a new home climbed above the key 36% threshold of relative affordability in April 2022, remaining above it in every month since. At least, until October 2025 when it finally dropped back below it.

We use the zero-down payment scenario to assess affordability because it provides a simple way to account for the opportunity costs of paying a down payment when buying a new home for many homebuyers. There are also several lending programs for qualified homebuyers that do provide a zero-down payment option to try to make buying a home more affordable, so it is also a realistic scenario on its own, though the majority of homebuyers do use money saved to make a down payment when they buy a home.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 20 February 2026. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 20 February 2026. 

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 2 March 2026. 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 calendar month.

Image credit: Wooden family figures and house with keys on table photo by IGOR LOLATTO on Unsplash.

Political Calculations' initial estimate of the total valuation of U.S. new home sales is $28.10 billion for November 2025 and $30.36 billion for December 2025. Initial sales and price data for both months recently became available after having been delayed because of the Senate Democrats' 43-day-long government shutdown fiasco during the last quarter of 2025.

The initial estimates of the number of new home sales reported for November and December 2025 is 53,000 and 57,000 for each month respectively, which indicate growth in the new home market as the year came to a close. Average new home prices are likewise higher than was recorded a year earlier at $530,200 and $532,600 for both months.

Taking basic seasonality into account, the trailing twelve month average of new home sales was $28.28 billion in November and $28.20 billion in December 2025. These figures indicate the new home market continued slowed after peaking at the revised estimates of $29.17 billion in September 2025 and the $28.85 billion estimated for October 2025.

These figures represent time-shifted, partial trailing twelve month averages. The initial estimate for any given month is based on the U.S. Census Bureau's estimated annualized number of new home sales multiplied by their average price for that month, which is averaged with the data for the preceding six months. These total valuation (or new home market capitalization) estimates are then updated as each new month's data is added to it, until it covers a full twelve months worth of data, and as older data is revised, which continues until that data is finalized some 10 months after the month for which the data applies.

The benefit of this approach is that it 'centers' the trailing average in something closer to real time, which makes it easier to tell when changes in trend take place. The disadvantage is that the latest data is incomplete. It will be subject to revision during the next nine months as new estimates are incorporated and older estimates are revised. The following charts present the U.S. new home market capitalization, the number of new home sales, and their sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through December 2025.

New home sales:

Average new home prices:

Here's how Realtor.com is reporting the year end of new home sales for 2025:

New-home sales jumped in November before retreating slightly in December to finish 2025 with an estimated 679,000 new homes sold, 1.1% fewer than in 2024. The momentum gained at the end of an otherwise slow year is an encouraging sign for new-home sales in 2026, as buyers are responding to lower mortgage rates and deciding to pull the trigger on newly built homes....

Though the annual sales totals for 2025 came in a bit lower than for 2024, the new-home market has some momentum and balance going into 2026 as demand for homes is heating up. It is still a good time to buy a new-construction home, but buyers may face a bit more competition than they did for most of 2025, and builders may find themselves in a position where they need more inventory to meet demand.

Since the end of 2025, mortgage rates have continued falling and dropped below the six percent level at the end of February 2026. The Census Bureau will report its new home sales data for January 2026 on 19 March 2026, which we'll cover sometime during the week following its release.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 26 August 2025. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 20 February 2026. 

Image credit: A hand reaching for a pink house in front of a row of houses photo by Jakub Żerdzicki on Unsplash.

The new home affordability crisis is showing signs of ending for the first time in nearly three-and-a-half years. The median sale price of a new home sold in the United States has dropped below the upper threshold of affordability that determines whether the typical American household can afford the monthly mortgage payment on the typical new home sold in the U.S.

That threshold is defined by having a mortgage payment that represents no more than 36% of household income, which lenders have historically used to determine whether they will loan money to a household that has no other debt. For October 2025, a household earning the median household income would that bought a new home at the month's median sale price of $392,300 would see their mortgage payment consume 34% of their monthly household income, which puts the typical new home within affordable reach.

For households that do carry other debt, lenders prefer their monthly mortgage payments consume no more than 28% of their pre-tax household income to ensure they have financial resilience to deal with unexpected expenses when their mortgage payments fall below these affordability thresholds. At 34% of its monthly household income, the median new home sold in October 2025 would be affordable for median income-earning households that carry low levels of other debt, the first time that's even been possible since March 2022.

The latest update of our chart tracks the changing relative affordability of the typical new home sold in the U.S. is for the typical American household with respect to the mortgage lending industry's key affordability thresholds from January 2000 through October 2025.

The National Association of Realtors explains the main factor why new homes have suddenly dropped into the range of affordability:

Prices for newly built homes fell to a four-year low in the fall as builders cut prices, according to a report delayed by the government shutdown.

The median sales price for new homes that went under contract in October was $392,300, down 8% from a year earlier and the lowest level since 2021, the U.S. Census Bureau reported on Tuesday.

New-home prices have been trending down since late 2022, after the affordability crisis priced many potential buyers out of the market. Homebuilders responded by cutting prices and boosting incentives.

This month, 40% of builders reported cutting prices, while 67% reported using sales incentives such as mortgage rate buydowns, according to the leading survey of homebuilder sentiment.

Meanwhile, sales of new homes improved year-over-year as mortgage rates were also lower on average in October 2025, contributing to the improved affordability of new homes for the typical American household:

Sales of new single-family houses were at a seasonally-adjusted annual rate of 737,000 in October, little changed from the prior month but up 19% from a year earlier.

Transactions rose as falling mortgage rates and prices both contributed to making new homes more affordable for prospective homebuyers.

Mortgage rates averaged 6.25% in October, down from 6.43% in October 2024, according to Freddie Mac.

The average price of a new home sold in October 2025 was $498,000, which was three percent higher than September 2025's average sale price of $483,500.

Looking at what that means for new home builders, we find time-shifted (centered) trailing twelve month average of the total value of new homes sold in the United States is $29.11 billion. We find the lower sale prices of new homes is contributing to an upward trend in the number of sales, but we find the average sale price of a new home is relatively stable, or flat.

The following charts present the U.S. new home market capitalization, the number of new home sales, and their sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through October 2025.

Rising trend for new home sales

Rising trend for average home prices

Following up our coverage of August 2025's potential statistical fluke increase in the number of new home sales, revisions to the sales data released on 13 January 2026 confirms the August 2025 sales figures were indeed a fluke.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 13 January 2025. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 13 January 2025. 

Image credit: Microsoft Copilot. Prompt: "An editorial cartoon featuring a real estate agent meeting a young family that earns the median household income who tells them they can afford to buy a new home, a calendar in the room shows it is October 2025", followed by a second prompt to "Make the family's expression happy and make the cartoon more colorful."