A National Association of Home Builders report shows the percentage of the population of each state that could afford the mortgage payment of a median-priced new home, with about 40% of the 125.4 million U.S. households able to make the $346,757 purchase in 2021. The data also show that 25 basis points added to the mortgage rate at a 30-year fixed rate of 2.8% would price out around 1.29 million households.
Median new home prices in states colored in darker shades are higher than those in lighter shades, with Hawaii topping the list at $672,000, followed by Massachusetts at $607,000 and Connecticut at $590,000. Median prices in Washington, D.C., which is not a state, reached $615,000.
Of course, housing prices are not the only determinant of affordability: Incomes play an important role as well. Based on conventional assumptions and underwriting standards, the minimum income required to purchase a $100,000 home is $22,505. About 21.1 million households in the U.S. are estimated to have incomes no more than that limit and, therefore, can only afford to buy homes priced no more than $100,000.
The states with the lowest percentage of households that can afford median-price new homes are Vermont at 16%, Connecticut at 21% and Wyoming at 23%. Those with the highest percentage are Delaware at 69%, Maryland at 57%, and Virginia at 54%.
The findings provide an interesting comparison across states as some employees consider moving to more affordable areas while working remotely, especially if they can take their higher incomes along with them.