Millions of homeowners want to cut their outgoings, worried about tariffs, mortgage interest rates and the various unpredictable scenarios that “lie in wait” for the average American these days. The latest NAHB data show that new homes are becoming more affordable, whereas the prices of existing homes are rising sharply, placing a heavy financial burden on lower-income buyers in key US markets. Which American would want to buy a house right now?
Who is buying homes at the moment?
With mortgage rates persistently high and tariffs pushing up construction costs, millions of homeowners are looking to optimise everything connected with running a home, while many prospective buyers have been shut out of the market altogether.
Data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI) show that the affordability of new homes has improved slightly. It has to be admitted, though, that the prices of existing homes continue to rise, creating high costs for lower-income buyers in key US markets.
In the second quarter of 2025, an American family on the national median income ($104,200 a year) had to reckon on spending 36% of that income to afford a mortgage on a new median-priced home. The situation is unchanged since the first quarter of this year. For lower-income families the figure fell by 1% – from 72% to 71%.
Affordability was more of a problem for existing homes. A typical US family had to hand over 37% of its income to buy an already-built home at the median price. Low-income Americans, meanwhile, faced a rather “dramatic” burden – 74% of their income...
“While the housing affordability crisis continues, builders have been working hard to make new homes more affordable. That has been achieved by reducing floor area, by lowering prices and by offering prospective buyers a range of other incentives,” stressed NAHB chairman Buddy Hughes. “The Cost of Housing Index shows that these efforts have produced results, but there is still much to be done.” In March this year, Hughes met US Trade Representative Jamieson Greer and testified before the US Congress in order to raise the profile of the impact of tariffs on housing construction in the country and help address it.
NAHB chief economist Robert Dietz: “Too many families in the US – owners of both new and existing homes – are burdened with very high costs. Policymakers need to provide regulatory relief and ease the supply-side bottlenecks that stop builders from being more active in housing construction.”
The second quarter of this year marked a historic turning point. For the first time, prices of existing homes in the US exceeded those of new homes, reaching the widest gap ever recorded. The median price of new homes fell by 1% to $410,800, while the median price of homes already circulating on the property market rose by 7% – to $429,400. Builders responded by offering smaller homes built on smaller plots. Many owners of previously purchased homes in the US are still “locked in” by their mortgage rates, which limits the supply of their properties on the market and forces them to “stay put”…
US property market experts define cost-burdened families as those that spend more than 30% of their income on housing. The US is divided into market zones (so-called metropolitan markets). In the second quarter, in 10 of the 175 property markets in this segment, homeowner families were burdened by high costs, spending more than 50% of their income on housing. A further 85 markets were moderately burdened, while 80 remained at an affordable cost level.
In the second quarter of 2025 several US metropolitan areas experienced extreme housing affordability pressure. In San Jose, California, for example, a typical American family was forced to spend 93% of its income to afford a mortgage on a median-priced home.
Other US metropolitan markets with a heavy financial burden
- Honolulu, Hawaii – 73%
- San Francisco, California – 72%
- San Diego, California – 67%
- Naples and Miami, Florida – 60%
For lower-income families in these regions the situation is even harder – mortgage payments would “take” between 119% and 186% of their income.
Markets with the lightest cost burden
By contrast, housing remains affordable in several smaller cities. In Decatur, Illinois, a typical family spends just 17% of its income on housing. Other markets with the lightest burden are:
- Elmira, New York – 18%
- Peoria, Illinois – 19%
- Davenport, Iowa–Illinois – 19%
- Binghamton, New York – 19%
Even for low-income families in these regions, housing costs amount to 33-38% of income – still high, but far more manageable than in the coastal metropolises of the US.
* The National Association of Home Builders (NAHB) of the United States of America is the largest US network of craftspeople, innovators and problem-solvers dedicated to building and enriching communities. Operating at local, state and national level, the NAHB federation helps its members gain a competitive advantage.