The U.S. housing market is short about 320,000 affordable homes for middle-income buyers, according to a new report from the National Association of Realtors (NAR) and Realtor.com.
After analyzing data from both real estate resources, the organizations found middle-income buyers can afford to buy less than a quarter (23%) of listings in the current market. Five years ago, this income group could afford to buy half of all available homes.
“Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through homeownership,” says Nadia Evangelou, NAR senior economist and director of real estate research. “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.”
According to the report, as of April, there were about 1.1 million homes available for sale. While 51% of households earn $75,000 and less, only 23% of the listings—262,580 listings—were affordable to these households. However, half of the listings—roughly 571,010 listings—should be on the market with a maximum value of $256,110 when the market is in equilibrium.
From this data and additional report findings, the researchers estimate the country needs to add at least two homes that are affordable for middle-income buyers—up to $256,000—for every home that is listed above $680,000.
Among the 100 largest metro areas, El Paso, Texas; Boise, Idaho; and Spokane, Washington, have the fewest affordable homes available for middle-income buyers. Two Florida cities—Cape Coral and Lakeland—make up the rest of the top five.
Four Ohio cities—Youngstown, Akron, Toledo, and Cleveland—have the most affordable homes available for that income group, with Syracuse, New York, trailing right behind at No. 5.
“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,” says Danielle Hale, Realtor.com’s chief economist. “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.”
