NAHB data maps modest housing affordability gains in 2025

The National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index, released on Thursday, indicates that housing affordability slightly improved in 2025 as new home prices decreased nationwide and mortgage rates steadily declined during the second half of the year.

The quarterly index shows that the average family needed to spend 34% of their income on a mortgage in Q4 of 2025 for a median-priced, new single-family home. This compares to 35% in Q3 and 34% in Q2, indicating a small change in housing affordability. In 2023, the index reached its highest at 41%.

Recent U.S. Census Bureau data showed that the median sales price of new homes sold in December fell 2.0% year over year, from $423,000 to $414,000. Last year, builders across the country increasingly offered incentives and price cuts to motivate buyers to close, amid ongoing affordability challenges and economic uncertainty.

This trend was especially clear in the Sun Belt, where homebuilders still face an oversupply of new homes amid a surge in speculative homebuilding following the COVID pandemic.

The typical 30-year mortgage rate, which now stands at about 6.0%, also steadily fell from a high of around 6.7% last May, leading to lower monthly payments.

Affordability for existing homes also improved. During the second quarter of last year, the typical family spent 37% of their income on a median-priced existing home. By the fourth quarter, that share decreased to 34%.

During a session at the International Builders’ Show in February, Realtor.com Chief Economist Danielle Hale predicted that the average monthly mortgage payment could decrease by 1.3% during 2026. Mortgage rates are expected to remain mostly steady, and home prices are forecasted to rise only slightly, even as household incomes improve.

“It’s not a huge drop, but it is the first decline that we’ve seen since 2020, so this is good news for buyers. It’s not great news, but it is good news for buyers,” she said during the session.

Despite modest improvements, the national housing market still remains unaffordable. However, there are significant regional differences. 

San Jose, California, was the most unaffordable market, with the mortgage payment on an existing home requiring 80% of a typical family’s income. Honolulu (69%), San Francisco (63%), San Diego (62%), and Miami-Fort Lauderdale-West Palm Beach (56%) also ranked among the least affordable housing markets.

Little Rock, AR (21%), Cleveland, OH (22%), Syracuse, NY (24%), Wichita, KS, and Montgomery, AL (23%) were among the most affordable large and mid-sized metro areas in the nation.