Unexpectedly Intriguing!
07 February 2024

Before starting this article, let's do a quick survey of news headlines that have appeared in the media during the past week. See if you can pick up on a what has become a common theme during the Biden era.

Who indeed?

That last question is being asked by realtor.com's Clare Trapasso, whose livelihood has a direct stake in the answer. Because she does, she takes the right approach in trying to answer it:

The median household income was $74,580 in 2022, according to U.S. Census Bureau data. But that income might not be high enough to afford a home when the median list price was $410,000 in December, according to the most recent Realtor.com® data. (Households are all of the people who live in the same home, such as singles, couples, families, and roommates.)

The rule of thumb is buyers shouldn't spend more than 28% of their income before taxes on housing. This includes their mortgage principal, interest, property taxes, and home insurance. Using that math, the typical U.S. household could afford a $270,000 home if they put 10% down and had little to no debt.

That price is about 34% less than what the typical home costs.

"It's challenging," says Realtor.com Chief Economist Danielle Hale. "Affordability today is not the worst it's ever been, but it's not much better."

There is a minor problem with the numbers she's using, but she's not too far off. If you're looking to quantify how affordable homes are in December 2023, which is the period that applies for Realtor.com's median cost estimate of $410,000 (the Census Bureau's initial estimate for a new home sold during the month is $413,000), you ideally want to match it with the median household income that applies for the same month. In this case, the Census Bureau's 2022 estimate of median household income is a full year out-of-date.

This is where we can take advantage of the monthly median household income estimates now being produced by Motio Research using data collected in monthly surveys by the Census Bureau (and our own complementary estimates from an alternate methodology). When we do that, we can get as close to fully current as is possible for this kind of analysis. Here is the chart showing our results in measuring the relatively affordability of new homes sold in the U.S. for the typical American household (one that earns the median household income).

Mortgage Payment for a Median New Home as a Percentage of Median Household Income, January 2000 - December 2023

For this analysis, we're assuming a zero-percent down payment because it simplifies the math and coincides with the minimum down payment range of 0% to 5% that varies by mortgage type. For example, government-subsidized VA and USDA mortgages have a 0% down payment requirement for those eligible, an FHA-backed mortgage will have a minimum 3.5% down payment, while the minimum down payment for a conventional mortgage will fall in the 3% to 5% range.

In December 2023, the median household income was about $77,000, the average interest rate for a 30-year conventional fixed-rate mortgage in the U.S. was 6.82%, and the initial estimate of the median new home sale price was $413,000. Putting these three things together, we find the monthly mortgage payment for the median new home sold during the month would consume 42% of the typical American household's income. That puts it well above the thresholds for being considered "affordable".

It is also above the very top peak for how relatively unaffordable new homes were during the housing bubble era of the early 2000s. Meanwhile, when Realtor.com's Chief Economist Danielle Hale says "affordability today is not the worst it's ever been, but it's not much better," she's right. The worst it has ever been was in October 2022. That was when the monthly mortgage payment for the median new home sold in the U.S. would have consumed more than half the income of an American household at the exact middle of the nation's income distribution.


U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 25 January 2024. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 25 January 2024. 

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 1 February 2024. 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.

Political CalculationSQ. Median Household Income in December 2023. [Online article]. 1 February 2024.

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.

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Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

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