US Homes Are Now the Least Affordable on Record, Atlanta Fed Data Shows
US homes are now the least affordable on record
U.S. homes have become the least affordable on record, according to data from the Federal Reserve Bank of Atlanta.
A household now needs more than $120,000 in income to afford a median priced home, more than the typical household earns. One Atlanta Fed based estimate put the needed income at $124,674, about 44% above the current median household income.
The Atlanta Fed's Home Ownership Affordability Monitor counts mortgage principal and interest at prevailing rates, plus property taxes, home insurance, and private mortgage insurance. Ownership is treated as unaffordable when those costs top 30% of income.
Rates are doing the damage
Thirty year mortgage rates hit 7.24% in mid-September. Freddie Mac's 30 year fixed rate averaged 7.28% as of Oct. 1, the highest since November 2023.
At those rates, the monthly payment on a $500,000 loan has jumped about $400, to roughly $3,400.
Home sales have plunged to a 31 year low. High rates are also locking in current owners who hold much cheaper mortgages, which keeps inventory tight and prices from falling.
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How this could hit the options market
Housing is a rate trade now. Homebuilders like DHI, LEN, and PHM trade on every move in the 10 year yield, and a push toward 7% mortgage rates pressures orders and margins.
Mortgage and title names are the second group to watch, including RKT, while home improvement retailers such as HD and LOW feel the freeze in existing home turnover.
Watch rate sensitive flow after each Treasury move. Until mortgage rates break lower, affordability data like this keeps a ceiling on the group.
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