Pyramid Illustrates Housing Affordability Crisis

Economics
Published
Priced Out Pyramid 2023

NAHB has updated its "housing affordability pyramid" for 2023, and the latest data show that 64.8 million households out of a total of 132.5 million are unable to afford a $250,000 home.

The pyramid is based on conventional underwriting standards that assume the cost of a mortgage, property taxes and property insurance should not exceed 28% of household income. Based on this methodology, NAHB economists have calculated how many households have enough income to afford a home at various price thresholds.

At the base of the pyramid are 39 million U.S. households with insufficient incomes to be able to afford a $150,000 home.

The pyramid's second step consists of 25.8 million with enough income to afford a top price somewhere between $150,000 and $250,000. Adding up the bottom two rungs shows that there are 64.8 million households who cannot afford a $250,000 home.

The nationwide median price of a new single-family home is $425,786, meaning half of all new homes sold in the U.S. cost more than this figure and half cost less. A total of 96.5 million households — roughly 73% of all U.S. households — cannot afford this median-priced new home.

This helps put affordability concerns into perspective and goes a long way toward explaining why housing affordability now stands at a more than 10-year low.

The top of the pyramid shows that 9.7 million households have enough income to buy a $850,000 home (adding up the top three rungs), and 2.9 million even have enough for a home priced at $1.55 million. But market analysts should never focus on this to the exclusion of the wider steps that support the pyramid's base.

On March 2, NAHB released its new Priced-Out Estimates for 2023, which shows that a $1,000 increase in the price of a median-priced new home will price 140,436 U.S. households out of the market for the home.

Prospective home buyers also are adversely affected when interest rates rise. NAHB's priced-out estimates show that 1.28 million households are priced out of the market for a new median priced home at $425,786 when interest rates rise a quarter-point from 6.25% to 6.5%. An increase from 6.5% to 6.75% prices approximately 1.29 million households out of the market.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Energy | Advocacy

Sep 16, 2025

Kansas City Builder Testifies Against Energy Code Mandates

The Home Builders Association of Greater Kansas City (KCHBA) called on Congress today to oppose energy code mandates that raise the cost of housing and do very little to increase energy efficiency for home owners.

Economics

Sep 16, 2025

Builder Confidence Steady but Future Sales Expectations Hit Six-Month High

Builder confidence in the market for newly built single-family homes was 32 in September, unchanged from the August reading, according to the NAHB/Wells Fargo Housing Market Index (HMI) released today. While builder sentiment has hovered at a relatively low reading between 32 and 34 since May, builders expressed optimism that a more favorable interest rate climate could bring hesitant buyers off the sidelines in the final quarter of 2025.

View all

Latest Economic News

Economics

Sep 16, 2025

Builder Confidence Steady but Future Sales Expectations Hit Six-Month High

Builder sentiment levels remained unchanged in September but lower mortgage rates and expectations that the Federal Reserve will soon cut the federal funds rate led to higher future sale expectations in the coming months.

Economics

Sep 15, 2025

Shelter Inflation Continued to Cool

Inflation accelerated to a seven month high in August as tariff-related costs continued to pass through to consumers, according to the Bureau of Labor Statistics’ (BLS) latest report. Core goods prices, which exclude volatile food and energy, rose by 1.5% in August, the fastest annual pace since May 2023.

Economics

Sep 15, 2025

Builders Stay Cautious as Single-Family Permits Extend Downtrend

Single-family housing permits slipped for the seventh month in a row, highlighting affordability headwinds and weak demand. While multifamily permits ticked up, the sector’s volatility leaves the outlook uncertain. The split underscores a housing market still under strain, with single-family softness weighing on broader growth prospects.