The cost of owning the typical new home sold in the United States remained fully out of the affordable reach of the median income-earning household for the 35th consecutive month in February 2025.

However, relative affordability of the monthly mortgage payment for the median priced new home sold during the month improved slightly as both mortgage rates and the median new home price declined while median household income increased. Altogether, we estimate the monthly mortgage payment would consume 39.3% of the monthly income of the typical U.S. household in February 2025.

While that's a decline from January's initial estimate of 42.9%, because it exceeds 36% of the median household's pre-tax income, the upper threshold of household income that mortgage lenders use to determine whether they will lend to a household that has no other debt, we find newly built homes continue to be affordable.

The latest update of our chart tracks the changing relative affordability of the typical new home sold in the U.S. is for the typical American household with respect to the mortgage lending industry's key affordability thresholds from January 2000 through February 2025.

This affordability factor is based on February 2025's initial median new home sale price of $414,500, an estimated median household income of $82,886, and an average 30-year conventional mortgage interest rate of 6.84%.

There is a real potential for improvement in affordability because the average mortgage rate for March 2025 is 6.65%. Whether that potential improvement is realized will hinge on what happens with new home sale prices, for which we won't have data until near the end of April 2025.
 

About the New Home Affordability Crisis

The affordability crisis for new homes has its origin in the high inflation that was unleashed by the Biden-Harris administration's policies in March 2021. Although it rose slowly at first, the cost of monthly mortgage payment began to skyrocket after December 2021. As a percentage of median household income, the monthly mortgage payment for a new home climbed above the key 36% threshold of relative affordability in April 2022. The relative affordability of new homes has remained above this level for 35 consecutive months.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 26 March 2025. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 26 March 2025. 

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 29 March 2025. 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.

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