# Pyramid Shows 21.1 Million Households Cannot Afford a \$100,000 Home

As described in a previous post, NAHB’s recently released its 2021 Priced-Out Estimates, showing that 75.1 million households are not able to afford a median priced new home, and that an additional 153,967 would be priced out if the price goes up by \$1,000. This post focuses on the related U.S. housing affordability pyramid, showing how many households have enough income to afford homes at various price thresholds.

The pyramid uses the same standard underwriting criterion as the priced-out estimates to determine affordability: that the sum of mortgage payments, property taxes, homeowners and private mortgage insurance premiums should be no more than 28% of the household income.  Based on this, the minimum income required to purchase a \$100,000 home is \$22,505. In 2021, about 21.1 million households in the U.S. are estimated to have incomes at or below that threshold and, therefore, the maximum priced home they can afford is between \$0 and \$100,000. These 21.1 million households form the bottom step or base of the pyramid. Another 19.0 million can only afford to pay a top price of somewhere between \$100,000 and \$175,000 (the second step on the pyramid), and so on up the pyramid. Each step represents a maximum affordable price range for fewer and fewer households.

The top step of the pyramid shows that around 3 million households can buy a home priced above 1.55 million. These comparatively wealthy Americans and the high-end homes they can afford are interesting, but market analysts should never only focus on them to the exclusion of the larger number of Americans with more modest incomes that support the pyramid’s base.

### 2 replies

1. 1. Oops:
“…75.1 million households are not able to afford a median priced new home” & pyramid title “US Households by highest priced home they CAN afford based on income.” Both conflict with the bold title, “Pyramid Shows 21.1 Million Households Cannot Afford a \$100,000 Home.” The title is incorrect (otherwise, only 3% cannot afford a +\$1.55M home).

2. Affordability Equation:
Omitting utility expenses is a serious flaw (e.g., lesson learned by H4H).

• I believe you are misreading the table. The pyramid shows that 75.1 million people can only afford a home below the current median new home price, as indicated on the table. Moreover, the table shows that 21.1 million people can only afford a home with a price no higher than \$100,000. Both of these numbers are correct based on the data.

To your second point, utility expenses are paid by most renters and owners. NAHB priced-out analysis uses the standard underwriting criterion to qualify a mortgage, that is incremental expense associated with mortgage and tax payment necessary to qualify for a mortgage to buy a home.