Even Small Increases Price Out Many Prospective Homebuyers
Washington, DC, January 9, 2019-A $1,000 increase in the cost of a median-priced newly-built home pushes 127,560 prospective buyers out of the market, cccording to a recent study by the National Association of Home Builders (NAHB).
In other words, based on their incomes, these households would be able to qualify for a mortgage to purchase the home before the price increase, but not afterward.
The numbers are even more startling when looking at the impact of potential interest rate increases. Just a quarter-point rise in the rate for a 30-year fixed-rate mortgage would price out around one million households.
The number of priced out households varies across both states and metropolitan areas, largely affected by the sizes of local population and the affordability of new homes. The study examines priced out estimates for every state and over 300 metropolitan areas.
Among all the states, Texas had the largest number of home buyers that would be priced of the market. The $1,000 price increase would push 11,152 households out of the market in Texas, followed by California (9,897) and Ohio (7,341).