US Housing Affordability Drops as Mortgage Rates Climb

US housing affordability declined in the second quarter of 2026, marking the first deterioration in nearly three years. Data from the National Association of Home Builders and Wells Fargo show that monthly payments on a median-priced $410,700 home now consume 34% of a typical family's income, an increase from 32% in the first quarter.

The decline follows a 2% rise in median new-home prices and an increase in 30-year mortgage rates to approximately 6.8%. The report attributes these higher borrowing costs to the US war with Iran. In response to flattening new-home sales, builders have begun implementing sales incentives and mortgage rate buydowns to attract buyers.

Bill Owens, chairman of the National Association of Home Builders, noted that buyers are struggling with economic uncertainty and high rates while builders face labor shortages and rising construction costs. A Bloomberg Intelligence survey reflects a pessimistic outlook for the sector, with 70% of investment professionals expecting single-family home starts to decline this year.