New NAHB data shows median-income families now need 34% of earnings for a new home mortgage
After three consecutive quarters of modest improvement, US housing affordability declined in the second quarter of 2026, as climbing mortgage rates and a rise in existing home prices pushed cost burdens higher across both median- and low-income households.
According to the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI), a family earning the national median income of $106,800 would need to allocate 34% of earnings to cover the mortgage payment on a median-priced new home in Q2. That's up from 32% in the first quarter of 2026.
The deterioration was driven by a more than 30-basis-point increase in the average 30-year mortgage rate, which rose from 6.20% in Q1 to 6.51% in Q2, alongside a 2% gain in the median new home price to $410,700.
For low-income households — those earning 50% of the area median — the income share required climbed from 65% to 67%.
Home‑purchase deal cancellations surged to a 3‑year high in July. Redfin data shows 14% of contracts fell through as buyers flex new leverage. Read more about the shifting housing market now. https://t.co/g6rwQKX4nE#realestate #housingmarket #mortgage #Redfin
— Mortgage Professional America Magazine (@MPAMagazineUS) August 21, 2026
Existing home prices compound the pressure
The burden is even sharper for buyers targeting the existing home market. The median price of an existing home surged 8% between quarters to $434,900, a considerably steeper increase than new construction.
That pushed the affordability share to 36% of income for a typical family and 71% for low-income households, compared with 32% and 65%, respectively, in Q1.
NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio, attributed the setback to a convergence of demand-side and supply-side pressures.
"Buyers faced high mortgage rates and economic uncertainty, while builders dealt with rising construction costs, unnecessary regulatory burdens and labor shortages," Owens said.
"The recently enacted 21st Century ROAD to Housing Act will help address many of these challenges, but implementation will take time."
NAHB Chief Economist Robert Dietz pointed to structural supply shortfalls as the underlying driver.
"A nationwide housing shortage of roughly 1.2 million units continues to strain affordability, and the latest CHI data show that too many households remain cost burdened," Dietz said.
"Policymakers need to remove regulatory barriers, reduce economic uncertainty and support a stronger business climate so builders can produce the homes and apartments the nation urgently needs."
Affordability shift — Q1 vs Q2 2026
| Home type & income tier | Q1 2026 | Q2 2026 | Change |
|---|---|---|---|
| New home — median income | 32% | 34% | +2pp |
| New home — low income | 65% | 67% | +2pp |
| Existing home — median income | 32% | 36% | +4pp |
| Existing home — low income | 65% | 71% | +6pp |
Figures represent the income share required to cover a median-priced home mortgage payment. Median family income: $106,800. Low income defined as 50% of area median income. Source: NAHB/Wells Fargo Cost of Housing Index, Q2 2026.
Key market drivers — Q1 to Q2 2026
| Indicator | Q1 2026 | Q2 2026 | Change |
|---|---|---|---|
| 30-year fixed mortgage rate | 6.20% | 6.51% | +31 bps |
| Median new home price | $403,200 | $410,700 | +2% |
| Median existing home price | $404,300 | $434,900 | +8% |
Source: NAHB/Wells Fargo Cost of Housing Index, Q2 2026.
Coastal markets bear the sharpest burden
The CHI assessed affordability across 175 metropolitan areas and found eight markets where a typical household must spend more than 50% of income on an existing home mortgage — the threshold the US Department of Housing and Urban Development (HUD) defines as a severe cost burden.
In 77 additional markets, families fall into the cost-burdened tier, devoting between 31% and 50% of income to housing.
San Jose-Sunnyvale-Santa Clara, California, topped the severely burdened list, where 82% of a median-income family's earnings are consumed by a typical home mortgage payment.
San Francisco-Oakland-Fremont followed at 71%, Urban Honolulu, Hawaii, at 70%, San Diego-Chula Vista-Carlsbad at 68%, and Naples-Marco Island, Florida, at 60%.
For low-income households in those five markets, the required income share ranges from 121% to 164%, figures that underscore the scale of displacement pressure in high-cost metros.
Relief is concentrated in the Midwest. Decatur, Illinois, remains the nation's least cost-burdened market at 16%, followed by Elmira, New York (17%), Peoria, Illinois (18%), Springfield, Illinois (20%), and Davenport-Moline-Rock Island across Iowa and Illinois (20%).
Low-income households in these markets spend between 31% and 39% of income on housing — still a burden by HUD's definition, but a fraction of what their counterparts face in California.
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