New construction home prices are at unseasonable highs, as the median U.S. new home price of $390,900 in August remained commensurate with July’s record. This increase in pricing is outpacing the national median household income, which has decreased 2.9% from 2019 to 2020 to $67,521 – a decline seen for the first time since 2011, with only modest rebounds so far in 2021, according to preliminary forecasts.
To put things in perspective, the minimum total household income for a mortgage on a $390,900 home, with a 6% down payment, typically falls just under $80,000. At this level, nearly 60% of U.S. households would not be eligible. Knock analyzed the top metro areas with the highest percentage of new construction sales to dive deeper into this affordability issue.
Based on our analysis, we found the following metro areas at both ends of the affordability spectrum based on required household income for the median new construction mortgage in their area;
Sacramento (80%), Miami (80%), Las Vegas (65%), Phoenix (63%), and Denver (62%) have the highest percentage of households unable to afford new construction.
San Antonio (49%), Oklahoma City (50%), Raleigh (50%), Minneapolis (51%), Atlanta (52%), and Dallas (52%) provide the most accessible new construction for homebuyers.