Unexpectedly Intriguing!
06 June 2024
A Well-Balanced Bungalow in San Antonio, TX which cost $6,000 in April 1924

One hundred years ago, it was possible to buy a newly-built home for $6,000. With conventional mortgage rates averaging about six percent during the 1920s, it would only have taken an annual income of $1,540 to afford the monthly mortgage payment for such a home. Well over half the Americans who filed income tax returns that year could easily afford to buy that new home.

One hundred years later, with interest rates for conventional fixed-rate 30-year mortgages hovering at seven percent, April 2024 saw the affordability of new homes remain out of reach for most American households. Mainly because the typical new home sold has become much more costly, but also because mortgage rates are higher. Even so, new homes were last as relatively affordable as they were in 1924 for a majority of American households in the months from May 2019 through March 2021.

The initial estimate of the median sale price for a new home in April 2024 is $433,500. With an estimated median household income of $77,760, the monthly mortgage payment for a new home would consume 44.5% of the income earned by a typical American household.

That is well above the long-established 28/36 rule that most traditional mortgage lenders use to determine the maximum amount of money they will lend to home buyers.

Those thresholds are shown in the following chart, which also verifies that new homes have been consistently above that upper affordability threshold for more than half of American households starting in April 2022.

Mortgage Payment for a Median New Home as a Percentage of Median Household Income, January 2000 - April 2024

Speaking of elevated mortgage rates, we now have 53 full years worth of monthly average mortgage rates in the United States. We've made that data available in the following interactive chart, if you're accessing this article on a site that republishes our RSS news feed, you may need to click through to our site to access the fully-functional chart, which is also accessible here and at Datawrapper.

The average interest rate for a conventional fixed-rate 30-year mortgage in May 2024 is 7.06%, which is slightly higher than the 6.99% average for April 2024. We anticipate the relative affordability of new homes in May 2024 will be similar to what it has been in recent months. Which is to say that most American households will continue to not be able to afford to buy a new home anytime soon.


U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 23 May 2024. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 23 May 2024. 

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

Political Calculations. Median Household Income in April 2024. [Online article]. 4 June 2024.

Image credit: San Antonio Light. [Vol. XLIV - No. 99.] (San Antonio, Tex.), Sunday, 27 April 1924. Chronicling America: Historic American Newspapers. Lib. of Congress. <https://chroniclingamerica.loc.gov/lccn/sn85060004/1924-04-27/ed-1/seq-60/>.


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