By: The Working Forest Staff
NAHB recently updated its priced out estimates for 2019. The new estimates show that, if the median U.S. new home price goes up by $1,000, 127,560 households would be priced out of the housing market nationwide. In other words, based on their incomes, 127,560 households would be able to qualify for a mortgage to purchase the home before the price increase, but not afterwards.
The number of priced out households varies across both states and metropolitan areas, largely affected by the sizes of the local population and the affordability of new homes. Among all the states, Texas registered the largest priced out effects that a $1,000 home price increase could push 11,152 households out of the market, followed by California (9,897), and Ohio (7,341).
The metropolitan area with the largest priced out effect, in terms of absolute numbers, is Chicago-Naperville-Elgin, IL-IN-WI, where 4,598 households are squeezed out of the market for a new median-priced home if price increases by $1,000. This is largely because Chicago is a populous metropolitan area with a large number of households; and, compared to the largest metropolitan areas on the East and West coasts, the median-priced home is more affordable, to begin with. Around 26% of households there are capable of buying new median-priced homes. For similar reasons, Houston-The Woodlands-Sugar Land, TX metro area, where nearly 32% of households can afford median-priced new homes.to begin with, registered the second-largest number of priced out households (3,622). In New York-Newark-Jersey City, NY-NJ-PA, 3,613 households are squeezed out of the housing market for a new median-priced home if price increases by $1,000. Compared to Chicago or Houston, the median-priced new home is affordable to a smaller share of the households in New York, but New York is the largest metro area by population size with over 7 million households.
NAHB 2019 priced-out estimates also present how interest rates affect the number of households would be priced out of the new home market. Around 1 million households could no longer afford to buy median-priced new homes as a result of mortgage rates increase from 4.85% to 5.1% nationwide.
More details, including priced out estimates for every state and over 300 metropolitan areas, and a description of the underlying methodology, are available in the full study .