NAR Study: U.S. Needs 300K+ Affordable Homes
Middle-income buyers can afford 23% of current listings; 5 years ago, they could afford 50%. Households making up to $75K need more homes at $256K or below.
WASHINGTON – The U.S. housing market is short more than 300,000 affordable homes for middle-income buyers, according to a new analysis from the National Association of Realtors® (NAR) and Realtor.com.
No one is affected by the persistent housing inventory crunch more than this group of Americans.
NAR and Realtor.com’s Housing Affordability And Supply Report examines the number of listings missing, based on price range, in the current market compared to a balanced market, which it considers one in which “half of all available homes fall within the price range affordable for middle-income buyers.”
Nadia Evangelou, NAR senior economist and director of real estate research, says the home shortage makes it even harder for middle-income buyers to build wealth through homeownership.
“A two-fold approach is needed to help with both low affordability and limited housing supply,” says Evangelou. “It’s not just about increasing supply. We must boost the number of homes at the price range that most people can afford to buy.”
At the end of April 2023, approximately 1.1 million homes were available for sale, an increase of 5 percentage points year-to-year. However, the market is missing almost 320,000 home listings valued up to $256,000 – the affordable price range for middle-income buyers or households earning up to $75,000.
Middle-income buyers can afford to buy less than one-in-four listings (23%) in the current market. Five years ago, this income group could afford to buy half of all available homes.
“Ongoing high housing costs and the scarcity of available homes continues to present budget challenges for many prospective buyers, and it’s likely keeping some buyers in the rental market or on the sidelines … until conditions improve,” says Realtor.com Chief Economist Danielle Hale.
Among the 100 largest metro areas, El Paso, Texas; Boise, Idaho; and Spokane, Wash. have the fewest affordable homes available for middle-income buyers. Three Ohio cities – Youngstown, Akron and Toledo – have the most affordable homes available for that income group.
“Even with the current level of listings, the housing affordability and shortage issues wouldn’t be so severe if there were enough homes for all price ranges,” Evangelou says. “Our country needs to add at least two affordable homes for middle-income buyers for every home listed for upper-income buyers.”
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