A $1,000 increase in the cost of a new median-priced home would push 127,560 prospective buyers out of the market, according to a new study by the National Association of Home Builders (NAHB).
Consequently, based on their incomes, these households would not be able to qualify for a mortgage to purchase the home after the price increase. Further, just a quarter-point rise in the 30-year fixed-rate mortgage would price out around 1 million households, NAHB said.
“This study illustrates how even a relatively small increase in price or interest rates can dramatically impact housing affordability,” NAHB Chairman Randy Noel, a home builder from LaPlace, La, said. “Housing affordability is a serious problem right now in communities across the country. Rising interest rates, regulatory barriers, higher building materials costs and labor shortages all add to the cost of a home and are preventing households from achieving the goal of homeownership.”
The study looks at these trends in each state and every region of the country. Those who are priced out based on these numbers vary depending on the state and the city. For example, Texas had the largest number of home buyers that would be priced of the market as a $1,000 price increase would push 11,152 households out of the market. California is second with 9,897 priced out, while Ohio is third with 7,341 priced out. Concerning metropolitan area, the Chicago region would be impacted the most with 4,499 households priced out if the price of new median-priced home increases by $1,000.