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Housing affordability declined in the second quarter of 2026 as higher mortgage rates, rising construction costs and economic uncertainty weighed on the market.
According to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI), results from the second quarter show that a family earning the nation’s median income of $106,800 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 to spend 67% of their earnings to pay for the same new home.
The figures are higher for the purchase of existing homes in the U.S. A typical family would have to pay 36% of their income for a median-priced existing home, while a low-income family would need to pay 71% of their earnings to make the same mortgage payment.
“Housing affordability weakened for both new and existing homes in the second quarter, driven by several factors,” says NAHB chairman Bill Owens, a homebuilder and remodeler from Worthington, Ohio. “Buyers faced high mortgage rates and economic uncertainty, while builders dealt with rising construction costs, unnecessary regulatory burdens and labor shortages. The recently enacted 21st Century ROAD to Housing Act will help address many of these challenges, but implementation will take time.”
The percentage of a family’s income needed to purchase a new home rose from 32% in the first quarter of 2026 to 34% in the second quarter, driven by a more than 30-basis point rise in the average mortgage rate and a 2% increase in the median price of a new home. The low-income CHI also rose 65% to 67% over the same period.
“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,” says NAHB chief economist Robert Dietz. “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.”
Meanwhile, affordability of existing homes moved lower than new homes for both median- and low-income families between the first and second quarter of this year. The CHI indices for existing homes were 36% and 71% in the second quarter vs 32% and 65%, respectively, in the first quarter. The affordability downturn was due primarily to a sharp increase in median home prices from the first to second quarter.
The Top 5 Severely Cost-Burdened Markets
San Jose-Sunnyvale-Santa Clara, Calif., was the most severely cost-burdened market on the CHI, where 82% of a typical family’s income is needed to make a mortgage payment on an existing home. This was followed by:
- San Francisco-Oakland-Fremont, California (71%)
- Urban Honolulu, Hawaii (70%)
- San Diego-Chula Vista-Carlsbad, California (68%)
- Naples-Marco Island, Florida (60%)
Low-income families would have to pay between 121% and 164% of their income in all five of the above markets to cover a mortgage.
The Top 5 Least Cost-Burdened Markets
By contrast, Decatur, Ill., was the least cost-burdened market on the CHI, where typical families needed to spend just 16% of their income to pay for a mortgage on an existing home. Rounding out the least burdened markets are:
- Elmira, New York (17%)
- Peoria, Illinois (18%)
- Springfield, Illinois (20%)
- Davenport-Moline-Rock Island, Iowa-Illinois (20%)
