Though new and existing homes remain largely unaffordable, the needle moved slightly in the right direction in the second half of 2025, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI). The CHI results from the fourth quarter of 2025 show that a family earning the nation’s median income of $104,200 needed 34% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of median income, would have had to spend 67% of their earnings to pay for the same new home.
“As the housing affordability crisis continues, builders have been steadfastly working to tackle this challenge head-on by constructing smaller homes, reducing prices, and offering other sales incentives,” said Bill Owens, a builder and remodeler from Worthington, Ohio. “While these efforts have produced modestly positive results, much work remains to be done on the policy front to eliminate regulatory and financial obstacles and reduce rising labor and material prices that are preventing builders from boosting housing production.”
Data for the CHI’s final two quarters of 2025 were delayed because of last fall’s government shutdown, but the figures indicate a slight improvement in affordability. In the last three quarters of 2025, the income share needed to buy a new home declined from 36% in the second quarter, to 35% in the third quarter, and 34% in the final quarter of 2025.
The same trend holds true for existing homes. A typical family would have had to pay 37% of their income for a median-priced existing home in the second quarter, 36% in the third quarter, and 34% in the final three months of 2025. A low-income family would have needed to pay 69% of their earnings to make the same mortgage payment on an existing home in the fourth quarter.
“While existing homes remain more expensive than new homes, that inversion of typical trends is closing,” said NAHB Chief Economist Robert Dietz. “A typical existing home sold for 5% more than a typical new home in the second quarter, 4% more in the third quarter, and just 2% more in the fourth quarter of 2025. Median new-home pricing has declined nearly 15% since late 2022 due to builder-enacted price cuts, a small decline in typical new-home size, and a geographic shift for construction to lower-cost areas such as the Midwest. Existing-home prices will be under downward pressure in 2026 due to ongoing housing affordability challenges.”
The CHI is a quarterly analysis of housing costs in the U.S. and at the metropolitan area level. The CHI represents the share of a typical family’s income needed to make a typical mortgage payment. The mortgage payment is calculated by taking median home prices, assuming a 10% down payment, and adding taxes, insurance and PMI. Median family income is published by the Department of Housing and Urban Development. A low-income CHI is also calculated for families earning only 50% of the area’s median income.
The U.S. data for the percentage of earnings needed to purchase a new home in the fourth quarter is based on a national median new home price of $405,300 and median income of $104,200. The fourth quarter median new home price is down 1.2% from $410,100 in the third quarter. The corresponding price for an existing home in the fourth quarter fell to $414,900, 2.8% down from $426,800 in the previous quarter. The average 30-year mortgage rate moved lower from 6.65% in the third quarter to 6.32% in the fourth quarter.
Visit nahb.org/chi for tables and details.
About the National Association of Home Builders
The National Association of Home Builders (NAHB) is a Washington-based trade association representing more than 140,000 members involved in homebuilding, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing, and other aspects of residential and light commercial construction. NAHB is affiliated with 700 state and local homebuilders associations around the country. NAHB’s builder members will construct about 80% of the new housing units projected for this year.
