Washington, D.C.—Housing affordability improved modestly in the first quarter of 2026, but homeownership remained out of reach for millions of Americans, according to the latest National Association of Home Builders/Wells Fargo Cost of Housing Index.
The index showed that a family earning the national median income of $106,800 needed 32% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning 50% of the median income, needed 65% of their earnings to pay for the same home.
The figures matched the purchase of existing homes. A typical family needed 32% of its income to buy a median-priced existing home. A low-income family needed 65%.
“While affordability for both new and existing homes saw modest improvement over the past year, home buyers continue to grapple with elevated mortgage rates and economic uncertainty while home builders are dealing with rising construction costs, excessive regulations and labor shortages,” said NAHB chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “Policymakers need to address these supply-side challenges to enable builders to increase the nation’s housing supply.”
NAHB chief economist Robert Dietz said affordability is moving in the right direction, but many families still face cost pressures. “The first quarter CHI data shows that far too many families remain cost-burdened even as housing affordability is slowly trending in the right direction,” he said. “A nationwide housing shortage of roughly 1.2 million units continues to exacerbate housing affordability challenges.”
Dietz said policymakers should focus on easing regulations, speeding permit approvals and supporting skilled labor training.
New and existing home prices converge
The price gap between new and existing homes has nearly disappeared.
In the first quarter, the median price for a new home was $403,200. The median price for an existing home was $404,300.
That marks a shift from the second quarter of 2025, when a median-priced existing home sold for 5% more than a new home. The gap narrowed over the next three quarters before reaching 0% in the first quarter of 2026.
NAHB attributed the change to builders shifting toward less expensive homes. Existing home sellers also lowered prices to attract buyers amid economic uncertainty.
The first-quarter median new home price fell slightly from $405,300 in the fourth quarter of 2025. The median existing home price dropped more sharply from $414,900.
The average 30-year mortgage rate also edged lower, falling from 6.32% in the fourth quarter to 6.20% in the first quarter.
Cost burdens remain widespread
The share of income needed to buy a new home fell from 34% in the fourth quarter to 32% in the first quarter. For low-income families, the share fell from 67% to 65%.
Affordability also improved for existing homes. The share of income needed to buy an existing home fell from 34% to 32% for a typical family. It fell from 69% to 65% for a low-income family.
The U.S. Department of Housing and Urban Development defines cost-burdened families as those who spend more than 30% of their income on housing. HUD defines severe cost burdens as spending more than 50%.
The index found that typical families were severely cost-burdened in seven of 175 markets in the first quarter. Another 59 markets were cost-burdened. In 109 markets, the cost of a mortgage was 30% of earnings or less.
Most cost-burdened markets
San Jose-Sunnyvale-Santa Clara, Calif., ranked as the most severely cost-burdened market. A typical family there needed 79% of its income to make a mortgage payment on a median-priced existing home.
Other severely cost-burdened markets included:
- San Jose-Sunnyvale-Santa Clara, Calif.: 79%
- Urban Honolulu, Hawaii: 68%
- San Diego-Chula Vista-Carlsbad, Calif.: 65%
- San Francisco-Oakland-Fremont, Calif.: 63%
- Naples-Marco Island, Fla.: 58%
Low-income families in those five markets needed between 115% and 158% of their income to cover a mortgage payment.
Least cost-burdened markets
Decatur, Ill., ranked as the least cost-burdened market. A typical family there needed 12% of its income to pay for a mortgage on a median-priced existing home.
Other least cost-burdened markets included:
- Decatur, Ill.: 12%
- Peoria, Ill.: 15%
- Elmira, N.Y.: 16%
- Springfield, Ill.: 17%
- Davenport-Moline-Rock Island, Iowa-Ill.: 18%
Low-income families in those markets needed between 25% and 37% of their income to cover the mortgage payment on a median-priced existing home.