NAHB Findings: 74% of Central Ohio Households Priced-Out of New Home Ownership

By Carol Rich

An updated “priced-out” affordability report from NAHB finds that 668,215 central Ohio households are now unable to afford the median price of a new home in our region.

A median new home price in our area is $427,798 and an income of $137,345 is needed to qualify at that price. With 73% of households unable to qualify for a mortgage on a central Ohio median-priced home, the Columbus area ranks slightly worse than the national average. Numbers like these bring housing affordability concerns front and center for our industry.

Observes Jon Melchi, BIA Executive Director: “We are currently in an environment where builders and developers face ever-mounting regulations and then are asked, ‘Why can’t you build something more affordable.’ The reality is, at all levels of government, the regulations never see an elimination of ineffective or outdated policies. They simply continue to compound, and these siloed entities feign shock at the rising cost of housing.”

Nationwide, the 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 — can’t afford this median-priced new home.

At current lending standards, Columbus area data shows that for every $1,000 increase in a home price, an additional 1,086 households will not be able to qualify.

Affordability hits low level

The steep rise in mortgage rates that began early in 2022, along with ongoing building material supply chain bottlenecks that increased construction costs, has led to a drop in housing affordability proven by three consecutive quarterly declines last year.

Housing affordability now stands at its lowest level since NAHB began tracking it on a consistent basis in 2012.

According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), just 38.1% of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $90,000. This marks the third straight quarterly record low for housing affordability since the Great Recession, trailing the previous mark of 42.2% in the third quarter and 42.8% set in the second quarter.

NAHB reports, however, that a recent drop in mortgage rates early in 2023 signals that declining affordability conditions may have reached their low point for this cycle and are ready for a turnaround.

“With mortgage rates anticipated to continue to trend lower later this year, affordability conditions are expected to improve, and this will increase demand and bring more buyers back into the market,” said NAHB Chief Economist Robert Dietz. “Ultimately, the best way to reduce housing costs is for policymakers to put into place the right policies that will allow builders to produce more affordable housing by fixing broken supply chains, easing excessive regulations and ensuring sufficient liquidity in the housing market.”