According to a recent analysis by the National Association of Realtors® (NAR) and Realtor.com®, the U.S. housing market is experiencing a shortage of over 300,000 affordable homes for middle-income buyers. This shortage disproportionately impacts middle-income buyers compared to other income brackets.
The housing affordability and supply report by NAR and Realtor.com® compares the current market to a balanced market, where half of all available homes fall within the price range affordable for middle-income buyers.
Nadia Evangelou, NAR senior economist and director of real estate research, highlighted the challenges faced by middle-income buyers, stating, “Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through homeownership. A two-fold approach is needed to help with both low affordability and limited housing supply. It’s not just about increasing supply. We must boost the number of homes at the price range that most people can afford to buy.”
As of April 2023, approximately 1.1 million homes were available for sale, representing a five percentage point increase from the previous year. However, the market is lacking nearly 320,000 home listings valued at up to $256,000, which falls within the affordable price range for middle-income buyers or households earning up to $75,000. Currently, middle-income buyers can afford to purchase less than a quarter (23%) of the listings in the market. Five years ago, this income group could afford to buy half of all available homes.
Realtor.com® Chief Economist Danielle Hale noted that high housing costs and limited inventory continue to pose budget challenges for many potential buyers. This situation may keep some buyers in the rental market or delay their home purchases until conditions improve. Hale suggests that those who can overcome affordability constraints might be increasingly attracted to newly constructed homes or suburban areas, where homeownership opportunities may be more realistic in the near term.
Among the 100 largest metro areas, El Paso, Texas; Boise, Idaho; and Spokane, Wash., have the fewest affordable homes available for middle-income buyers. On the other hand, three Ohio cities—Youngstown, Akron, and Toledo—have the most affordable homes for this income group.
Evangelou emphasized that the severity of housing affordability and shortage issues could be mitigated if there were sufficient homes available across all price ranges. She stated, “Our country needs to add at least two affordable homes for middle-income buyers for every home listed for upper-income buyers.”
