The relative affordability of the typical new home sold in the U.S. dipped slightly in February 2023.
Coming out of January 2023's improvement, we had anticipated lower mortgage rates recorded in February 2023 would lead to a lower median new home's mortgage payment. Instead, those lower mortgage rates were not able to offset a month-over-month increase in the median sale price of new homes. The median new home sold in the U.S. became slightly less affordable as a result.
That outcome is shown in the following chart, which tracks the mortgage payment for the median new home sold in the U.S. as a percentage of median household income. The chart shows that after dipping to a revised 39.3% in January 2023, the mortgage payment for a median new home sold in February consumed an initial estimate of 40.1% of median household income.
Overall, the share of a median household's income that would be consumed by the mortgage payment for a new home continues to exceeds the levels recorded during the height of the early 2000s' housing bubble. That is to say new homes have never been less affordable for the typical American household than the period from mid-2022 to the present.
References
U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 23 March 2023.
U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 23 March 2023.
Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 5 March 2023. 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: Photo by Tierra Mallorca on Unsplash.