In February 2024, the median new home price sold in the United States fell to $400,500. While this initial estimate will go through three sets of revisions before being finalized, it so far represents the lowest median price recorded for a new home since June 2021. The typical new home sold in the United States between then and now have exceeded that threshold.

Unfortunately that doesn't help the typical American household very much. Even at the lowest price recorded for the median new home sold since June 2021, it still remains out-of-reach for the typical American household.

With conventional fixed-rate 30-year mortgages averaging an interest rate of 6.78% during February 2024, the monthly mortgage payment for the median new home sold would consume 40.3% of the income earned by a household at the exact middle of the U.S. income spectrum.

The following chart shows how the relative affordability of the typical new home sold in the U.S> has evolved throughout the twenty-first century, from January 2000 through February 2024.

(Click on image to enlarge)

This measure remains well above the 28% mortgage debt-to-income ratio and 36% total debt-to-income ratio thresholds that mortgage lenders set for borrowers to ensure they are capable of supporting their mortgage payments.

The mortgage payment for a median new home sold has consistently exceeded the 28% basic affordability threshold since February 2021 and the higher 36% affordability threshold since March 2022.

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