Housing affordability weakened across the United States in the second quarter, according to the NAHB/Wells Fargo Cost of Housing Index. Higher mortgage rates and rising home prices increased the share of income needed for mortgage payments on both new and existing homes, with lower-income households facing substantially higher burdens.
Key Takeaways
- A median-income U.S. family needed 34% of its income for a mortgage on a median-priced new home in the second quarter, up from 32% in the first quarter.
- The share of income required for a median-priced existing home rose to 36%, compared with 32% in the first quarter.
- The average 30-year mortgage rate increased from 6.20% in the first quarter to 6.51% in the second quarter.
- The median new-home price rose 2% to $410,700, while the median existing-home price increased 8% to $434,900.
- San Jose-Sunnyvale-Santa Clara, California, had the highest existing-home mortgage burden among the 175 metropolitan areas measured, at 82% of a typical family’s income.
U.S. Housing Affordability Weakens in the Second Quarter
The share of income needed for a typical U.S. family’s mortgage payment increased for both new and existing homes in the second quarter, according to the National Association of Home Builders/Wells Fargo Cost of Housing Index. The increase followed three consecutive quarters of modest improvement in housing affordability.
For a family earning the national median income of $106,800, the mortgage payment on a median-priced new home required 34% of income in the second quarter. That compared with 32% during the first quarter.
The measure was higher for existing homes. A typical family needed 36% of its income to make the mortgage payment on a median-priced existing home, compared with 32% in the first quarter.
The figures place the typical mortgage burden above the 30% threshold used by the U.S. Department of Housing and Urban Development to define a housing cost burden. HUD defines severe cost burden as spending more than 50% of income on housing.
The NAHB/Wells Fargo index measures the share of a family’s income needed to make a typical mortgage payment. The calculation uses median home prices, a 10% down payment, property taxes, insurance and private mortgage insurance, along with median family income published by HUD.
The index also measures affordability for households earning 50% of the median income. That measure showed substantially greater pressure in the second quarter.
For additional context on borrowing costs, recent mortgage rate movements have also been accompanied by changes in purchase activity and buyer budgets.
Mortgage Rates and Home Prices Increase Housing Costs
The average 30-year mortgage rate increased from 6.20% in the first quarter to 6.51% in the second quarter. The more than 30-basis-point increase contributed to the higher share of income required for a new-home mortgage.
The national median price of a new home also increased during the quarter. It rose 2%, from $403,200 in the first quarter to $410,700 in the second quarter.
Those two changes combined to push the new-home affordability measure from 32% to 34% for a median-income family.
The affordability calculation assumes a 10% down payment rather than a 20% down payment. It also includes taxes, insurance and private mortgage insurance in the mortgage-payment calculation.
The second-quarter figures therefore capture more than the monthly principal and interest payment. They measure the share of household income needed to cover the mortgage payment under the index’s assumptions.
The higher mortgage rate also affected households considering existing homes, although the larger increase in existing-home prices had a greater effect on that segment’s affordability measure.
A separate report on higher mortgage borrowing costs documented the effect of elevated rates on purchasing power earlier in 2026.
Existing-Home Affordability Declines More Sharply
The median price of an existing home increased 8% between the first and second quarters, rising from $404,300 to $434,900. The increase was substantially larger than the 2% quarterly increase recorded for new homes.
That price increase contributed to the existing-home affordability measure rising from 32% to 36% for a median-income family.
The second-quarter figure means a typical family needed more than one-third of its income to make the mortgage payment on a median-priced existing home under the NAHB/Wells Fargo calculation.
Affordability also deteriorated for lower-income households purchasing existing homes. The low-income index increased from 65% in the first quarter to 71% in the second quarter.
For new homes, the corresponding low-income measure rose from 65% to 67%.
The difference between the new- and existing-home figures was therefore apparent for both income groups. Existing homes required a larger share of income for median- and low-income families in the second quarter.
The combination of home prices and mortgage rates determines the mortgage burden measured by the index. The second-quarter results show that the increase in existing-home prices was particularly pronounced during the period covered by the report.
Lower-Income Families Face Higher Mortgage Burdens
Families earning half of the median income faced mortgage burdens well above the 30% cost-burden threshold in both housing categories.
A low-income family purchasing a median-priced new home needed 67% of its income for the mortgage payment in the second quarter. For a median-priced existing home, the figure reached 71%.
The measures increased from 65% for both types of homes during the first quarter.
The gap between median-income and low-income households was substantial. A median-income family needed 34% of income for a new-home mortgage compared with 67% for a low-income family. For existing homes, the corresponding figures were 36% and 71%.
The index’s low-income measure is calculated for households earning 50% of the median income. The figures therefore account for differences in income levels when assessing affordability at the income levels measured by the index.
The second-quarter data also show that affordability pressure was not limited to one type of housing. Both new and existing homes became less affordable for households at the income levels measured by the index.
The NAHB cited higher mortgage rates, rising construction costs and economic uncertainty among factors affecting affordability during the quarter. NAHB Chairman Bill Owens also said builders faced rising construction costs, regulatory burdens and labor shortages.
Metropolitan Markets Show Wide Affordability Differences
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The national affordability figures conceal large differences among U.S. metropolitan areas. The NAHB/Wells Fargo index measured existing-home mortgage burdens in 175 metropolitan markets during the second quarter.
Eight markets were classified as severely cost-burdened for typical families, meaning more than 50% of income was needed for the mortgage payment on a median-priced existing home.
San Jose-Sunnyvale-Santa Clara, California, recorded the highest burden at 82% of a typical family’s income. San Francisco-Oakland-Fremont, California, followed at 71%, while Urban Honolulu, Hawaii, recorded 70%.
San Diego-Chula Vista-Carlsbad, California, had a 68% burden, followed by Naples-Marco Island, Florida, at 60%.
Low-income households faced even higher percentages in those five markets, with the mortgage burden ranging from 121% to 164% of income.
The index also identified markets with substantially lower burdens. Decatur, Illinois, recorded the lowest figure among the 175 metropolitan areas, with a typical family needing 16% of income for a mortgage on a median-priced existing home.
Elmira, New York, followed at 17%, while Peoria, Illinois, recorded 18%. Springfield, Illinois, and Davenport-Moline-Rock Island, Iowa-Illinois, each recorded 20%.
Low-income families in those five least cost-burdened markets needed between 31% and 39% of income for the mortgage payment on a median-priced existing home.
The metropolitan data show that housing affordability varies significantly according to local home prices and household incomes. The same mortgage-rate environment can therefore produce substantially different affordability burdens across U.S. housing markets.
Frequently Asked Questions
How much income is needed to afford a U.S. home in 2026?
The NAHB/Wells Fargo index found that a median-income family earning $106,800 needed 34% of its income for a mortgage on a median-priced new home in the second quarter. The figure was 36% for a median-priced existing home.
Did mortgage rates increase in the second quarter of 2026?
Yes. The average 30-year mortgage rate increased from 6.20% in the first quarter to 6.51% in the second quarter.
How did existing-home affordability change in Q2 2026?
The share of income required for a median-priced existing-home mortgage increased from 32% to 36% for a median-income family. For a low-income family, the measure increased from 65% to 71%.
Which U.S. markets have the highest housing cost burdens?
San Jose-Sunnyvale-Santa Clara, California, recorded the highest existing-home mortgage burden among the 175 metropolitan areas measured, at 82% of a typical family’s income. San Francisco-Oakland-Fremont, Urban Honolulu, San Diego-Chula Vista-Carlsbad and Naples-Marco Island followed among the five highest.
What is the NAHB/Wells Fargo Cost of Housing Index?
The index measures the share of a family’s income needed to make a typical mortgage payment. Its calculation uses median home prices, a 10% down payment, taxes, insurance and private mortgage insurance, together with median family income.
