While housing affordability remains out of reach for millions of Americans, particularly first-time and entry-level buyers, conditions have improved modestly in the last year, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI). The CHI results from the first quarter of 2026 show that a family earning the nation’s 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 only 50% of median income, would have to spend 65% of their earnings to pay for the same new home.
In the last year, the income share needed to buy a new home declined from 36% in the second quarter of 2025, to 35% in the third quarter, 34% in the fourth quarter, and to 32% in the first quarter of 2026. Although home buyers continue to grapple with elevated mortgage rates and economic uncertainty, these figures indicate a modest improvement in affordability.
The same trend holds true for existing homes. A typical family would have had to pay 37% of their income for a median-priced existing home in the second quarter of 2025, 36% in the third quarter, 34% in the fourth quarter, and 32% in the first quarter of 2026. A low-income family would have needed to pay 65% of their earnings to make the same mortgage payment on an existing home in the first three months of 2026.
The U.S. data for the percentage of earnings needed to purchase a new home in the first quarter is based on a national median new home price of $403,200 and median income of $106,800. The first quarter median new home price is down slightly from $405,300 in the fourth quarter of 2025. Meanwhile, the corresponding price for an existing home fell more sharply in the first quarter to $404,300 from $414,900 in the previous quarter. The average 30-year mortgage rate edged slightly lower from 6.32% in the fourth quarter to 6.20% in the first quarter.
CHI is also available for 175 metropolitan areas, calculating the percentage of a family’s income needed to make the mortgage payment on an existing home based on the local median home price and median income in those markets.
In seven out of 175 markets in the first quarter, the typical family is severely cost-burdened (must pay more than 50% of their income on a median-priced existing home). In 59 other markets, such families are cost-burdened (need to pay between 31% and 50%). There are 109 markets where the CHI is 30% of earnings or lower.
The Top 5 Severely Cost-Burdened Markets
San Jose-Sunnyvale-Santa Clara, Calif., was the most severely cost-burdened market in the CHI, where 79% of a typical family’s income is needed to make a mortgage payment on an existing home. This was followed by:
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 would have to pay between 115% and 158% 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 markets on the CHI, where typical families needed to spend just 12% of their income to pay for a mortgage on an existing home. Rounding out the least burdened markets are:
Peoria, Ill. (15%)
Elmira, N.Y. (16%)
Springfield, Ill. (17%)
Davenport-Moline-Rock Island, Iowa-Ill. (18%)
Low-income families in these markets would have to pay between 25% and 37% of their income to cover the mortgage payment for a median-priced existing home.
Visit nahb.org/chi for tables and details.
This article was originally published by a eyeonhousing.org . Read the Original article here. .
Terry Vinn of Totus Construction says he finds clients can be influenced by television renovation shows. “This can result in a costly mistake as clients have often already paid fees for an architect’s drawings or planning,” he says. “They realize they’re way off in terms of their budget.”
Cat Hoad of Absolute Project Management agrees, saying she often finds a budget is too low for the client’s aspirations in terms of scope and finish.
Solution: “Showing clients the best options and the reality of these costs is the best we can do to inform their choices,” Spencer says. “We always let our clients know they can purchase suggested items over time to spread the cost too.”
Encouraging clients to consider phasing the work is another option — tackling phase one now with the initial budget, then phase two a year or so later when the budget has recovered.
Vinn underlines the value of getting clients to engage with the builder at the concept stage of the project. “Builders can explain the cost differences between various design options, preventing the need to go back to the drawing board at a later stage, which would equal additional architect’s fees.”
Hoad agrees with starting the conversation early. “One of the first bits of paid work is to set up an outline budget,” she says. Her outline will have headings with the approximate cost for the various professionals involved and estimated costs for each part of the second fix.
“The total can, of course, change dramatically, but it’s a means for the client to see clearly how their money is likely to be spent, and it helps them to make decisions and prioritize accordingly,” she says.