The new home affordability crisis continued in April 2025 with a home affordability factor of 38.0%. The monthly mortgage payment for the median new home sold in the United States would consume more than 36% of the pre-tax income of a household earning the median household income, putting it in the very high danger zone for affordability. The affordability factor has been in this zone for the last 37 months.

The very high danger zone starts at 36%, which represents the upper threshold of affordability that lenders have historically used to determine whether they will loan money to a household that has no other debt. For households that do carry other debt, lenders prefer their monthly mortgage payments consume no more than 28% of their pre-tax household income. Borrowers have more financial resilience to deal with unexpected expenses when their mortgage payments fall below these affordability thresholds.

April 2025's affordability data remains within two percent of the upper threshold of affordability, which is close to being the most "affordable" a new home has been during the past three years. 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 April 2025.

The affordability factor of 38.0% is based on April 2025's initial median new home sale price of $407,200, an estimated median household income of $89,273, and an average 30-year conventional mortgage interest rate of 6.73%. Both the median new home sale price and the monthly mortgage rate ticked up slightly from March 2025's levels.

Looking ahead to May 2025, the interest rate for the average 30-year conventional fixed rate mortgage ticked up to 6.82%, which represents a headwind for new home affordability. Only a surge in household income or a decline in the median new home sale price would be able to counteract this headwind to improve new home affordability.
 

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, remaining above it in every month since.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 23 May 2025. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 23 May 2025. 

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