Throughout the COVID-19 pandemic, the U.S. housing market has been surprisingly strong and resilient, with low interest rates and pent-up demand benefiting sellers — and home prices rose drastically in 2020 as a result.
However, the flip side of this trend is a rising affordability challenge. The National Association of Home Builders reports in a new study that roughly 60% of all U.S households are currently unable to afford a new median priced home. Additionally, for every $1,000 increase to the median home price, nearly 154,000 more households would get squeezed out of the market.
Builders say there are several factors contributing to the lack of affordable housing, including shortages or delays in obtaining building materials, as well as rising material costs, particularly record-high lumber prices. And as long as demand outpaces supply in the housing market, prices figure to keep climbing, which is good news for sellers but not for buyers looking for a deal.
Until the affordability paradigm shifts, mobility teams would be wise to focus attention on home finding support, because it’s likely that many relocating employees will face challenges when it comes to finding a new home within their budgets.
Putting the affordability challenge further in perspective, 75.1 million households, or roughly 60% of all U.S households, are currently unable to afford a new median priced home. “While builders across the nation are reporting solid demand for new homes fueled by low interest rates, favorable demographics and a suburban shift to more affordable markets as a result of the COVID-19 crisis, many prospective buyers are hitting a brick wall due to a run-up in pricing in recent years,” said NAHB Chairman Chuck Fowke.