Home buyers with “middle incomes” are finding sparse inventory, according to a new report from the National Association of Realtors® and Realtor.com®. Their analysis found middle-income buyers face the most severe shortages of homes in their price range.
The nation’s housing market is missing about 320,000 home listings valued up to $256,000, which is the affordable price range for middle-income buyers, defined as households earning up to $75,000. For these buyers, only around 23% of current inventory fits their budget.
The NAR and Realtor.com housing affordability and supply report examines the number of listings missing by price range in the current market when compared to a balanced market. The groups define a balanced market as one where half of all available homes fall within the price range affordable for middle income buyers.
NAR notes slightly more than half of U.S. households (51%) earn $75,000 or less. In a balanced market, these households would be able to afford to buy 51% of the homes for sale.
Researchers compared 100 largest metro areas. That comparison found El Paso, Texas; Boise, Idaho; and Spokane have the fewest affordable homes available for middle-income buyers. The three areas with the most homes available for this segment are all in Ohio – Youngstown, Akron, and Toledo.
In King County, where Census figures indicate the median household income (in 2021 dollars) is $106,326, mortgage calculators estimate these households could afford a home priced around $400,500. At the end of July, a survey of Northwest Multiple Listing Service data showed only 230 of around 3,500 active listings of homes and condos offered for sale in King County had asking prices under that threshold. That’s about 6.6% of current supply.
“Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through homeownership,” said Nadia Evangelou, NAR senior economist and director of real estate research.
Evangelou said a twofold 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.”
The 12-page report shows the gaps are even larger for racial minority groups. “Black Americans are the group that is further away from equilibrium than any other group,” the author’s stated.
“Ongoing high housing costs and the scarcity of available homes continue to present budget challenges for many prospective buyers, and it’s likely keeping some buyers in the rental market or on the sidelines and delaying their purchase until conditions improve,” said Realtor.com® Chief Economist Danielle Hale. “Those who are able to overcome affordability constraints may be increasingly drawn to newly constructed homes or to the suburbs and beyond, both of which may offer buyers more realistic opportunities for homeownership in the near term.”
NAR is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. Realtor.com is an open real estate marketplace that pioneered digital real estate more than 25 years ago. It is operated by News Corp subsidiary Move, Inc.