Housing affordability remains a critical issue across the United States, affecting millions of households. The National Association of Home Builders has updated their 2024 Housing Affordability Graph with the most recent data showing 66.6 million households (49% out of a total of 134.9 million) are unable to afford a $250,000 home.
Additionally, 77% of American households can’t afford a median-priced home. This is largely due to rising home prices and interest rates, which have placed homeownership out of reach for many Americans.
For example, according to a current NAHB Eye on Housing article, a $1,000 increase in home price could potentially price out an additional 106,031 households from affording a new home?.
Interest rates play a pivotal role in housing affordability. Recent reports indicate that the Federal Reserve might hold interest rates steady until mid-2024, providing a slight reprieve for potential homebuyers?. This stabilization could improve affordability marginally, although high home prices continue to be a barrier.
In Tennessee, the housing market has experienced marked changes. Home prices in our state rose by 8.3% in April 2024 over the previous year, while the number of homes sold increased by 11.3% and the number of homes for sale grew by 15.1%??.
Despite these increases, affordability remains a significant concern, particularly in metro areas such as here in Chattanooga. Our local area is seeing an influx of residents from across the U.S., with significant resettling from within the state and region. This population growth has increased competition over moderately-priced housing, putting pressure on both availability and affordability.
To help support homebuyers, Tennessee is offering multiple programs and initiatives. The Tennessee Housing Development Agency offers down payment assistance and affordable mortgage options, which have helped many residents achieve homeownership sooner than they could have independently. These efforts are essential for maintaining a pathway to homeownership amid ongoing economic pressures.
Additionally, the NAHB has put out a 10-point plan to address housing affordability with initiatives that can be taken at local, state and federal levels. These strategies are geared toward addressing the root of the problem – those issues that hinder the nation’s housing supply.
Read more about how the NAHB and HBAGC are working to improve housing affordability both nationally and locally at NAHB.org and hbagc.net.