Quarter-Point Mortgage Rate Hike Knocks 1.3 Million Households Out of Market
In today’s interest rate environment, a quarter-point rise in mortgage rates would price approximately 1.3 million households out of the market for a new home with an estimated median price of $425,786, according to the latest analysis by NAHB. And if the Federal Reserve moves later today to continue to hike interest rates, this will put upward pressure on mortgage rates.
Monthly mortgage payments would increase as a result of rising mortgage interest rates, and therefore, higher household income thresholds would be needed to qualify for a mortgage. In other words, a quarter-point rate hike would force potential buyers to set their sights on a house selling lower than a median-priced home.
The table below shows the number of households priced out of the market for a new median-priced home at $425,786 for each 25 basis-point increase in interest rates from 3.5% to 8%. When interest rates increase from 6.25% to 6.5%, approximately 1.28 million households can no longer afford to buy a median-priced new home. An increase from 6.5% to 7% prices approximately 1.29 million more households out of the market.

As interest rates rise higher, fewer households are priced out of the market for a median-priced home because only a declining number of households at the higher end of household income distribution would be affected. When interest rates are relatively low, a 25 basis-point increase would affect a larger number of households at the lower and more populous part of income distribution.
Another recent report from NAHB shows how many households in individual states and metro areas would be priced out of a home for each $1,000 increase in the price of a home.
NAHB Principal Economist Na Zhao provided this analysis in a recent Eye on Housing blog post.
Latest from NAHBNow
Oct 13, 2025
From Computers to Construction: How NAHB Inspired a Career ChangeDrew Williams had strong success in computer technology, even earning a patent for a motion detection and sound recognition dash camera, but felt his original passion start to slip. That's when he made a career change that brought back old memories.
Oct 10, 2025
Senate Passes Major Housing PackageThe Senate passed NAHB-supported housing legislation that offers meaningful solutions to increase the nation’s housing supply by addressing key concerns around zoning and land-use policies, the aging housing stock, rural housing, and multifamily housing.
Latest Economic News
Oct 10, 2025
Vinyl Surpasses Stucco as Most Used Principal Exterior Wall MaterialIn 2024, vinyl siding was the most used principal exterior wall material for homes started. It holds just over a quarter share of homes, slightly surpassing stucco for the first time since 2018.
Oct 09, 2025
Remodeling Market Sentiment Improves in Third QuarterIn the third quarter of 2025, the NAHB/Westlake Royal Remodeling Market Index (RMI) posted a reading of 60, up one point compared to the previous quarter. With the reading of 60, the RMI remains solidly in positive territory above 50, but lower than it had been at any time from 2021 through 2024.
Oct 08, 2025
Refinancing Activity Surges in SeptemberRefinancing activity surged in September, marking the largest monthly increase since the COVID-era of ultra-low interest rates. This increase followed mortgage rates dropping below 6.5% for the first time since October 2024 in anticipation of rate cuts that ultimately materialized.