Residential Real Estate News
The U.S. Market is Short Over 300,000 Affordable Homes in 2023
According to a new analysis from the National Association of Realtors and Realtor.com, the U.S. housing market is short of more than 300,000 affordable homes for middle-income buyers. The country's persistent housing inventory crunch impacts middle-income buyers more than any other income bracket.
NAR and Realtor.com's housing affordability and supply report examines the number of listings missing by price range in the current market when compared to a balanced market. A balanced market is defined as when half of all available homes fall within the price range affordable for middle-income buyers.
"Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through homeownership," said Nadia Evangelou, NAR senior economist and director of real estate research. "A two-fold approach is needed to help with both low affordability and limited housing supply. It's not just about increasing supply. We must boost the number of homes at the price range that most people can afford to buy."
At the end of April 2023, approximately 1.1 million homes were available for sale, an increase of 5 percentage points from one year ago. However, the market is missing almost 320,000 home listings valued up to $256,000, the affordable price range for middle-income buyers or households earning up to $75,000. Middle-income buyers can afford to buy less than a quarter (23%) of listings in the current market. Five years ago, this income group could afford to buy half of all available homes.
"Ongoing high housing costs and the scarcity of available homes continues to present budget challenges for many prospective buyers, and it's likely keeping some buyers in the rental market or on the sidelines and delaying their purchase until conditions improve," said Realtor.com Chief Economist Danielle Hale. "Those who are able to overcome affordability constraints may be increasingly drawn to newly constructed homes or to the suburbs and beyond, both of which may offer buyers more realistic opportunities for homeownership in the near term."
Among the 100 largest metro areas, El Paso, Texas; Boise, Idaho; and Spokane, Wash. have the fewest affordable homes available for middle-income buyers. Three Ohio cities - Youngstown, Akron and Toledo - have the most affordable homes available for that income group.
"Even with the current level of listings, the housing affordability and shortage issues wouldn't be so severe if there were enough homes for all price ranges," Evangelou added. "Our country needs to add at least two affordable homes for middle-income buyers for every home listed for upper-income buyers."
