New NAHB analysis on housing affordability based on race and ethnicity shows a wide disparity regarding the number of households that can afford a new median priced home.
At the national level, the share Black households that are able to afford the new homes is substantially lower than the share of non-Hispanic white households. Only 24% of Black households are able to afford the median new U.S. price of $346,577. Among non-Hispanic white households, 44% have sufficient income to qualify for a mortgage for a new median priced home under standard underwriting criteria, compared to 56% of Asian households and 32% of Hispanic households.
The number of households being priced out of the market due to a $1,000 price increase varies among different racial/ethnical groups but is more or less proportional to population size. The largest priced-out number as a result of a $1,000 price increase is 106,278 for non-Hispanic white households, which accounts for around 67% of total U.S. households. By contrast, the number of Black and Hispanic households that would be priced out the market due to a $1,000 price hike are 15,840 and 21,376, respectively.
The affordability gaps between non-Hispanic white households and minority households are persistent across all states and are in fact larger in states where new home prices are relatively more affordable. The share of households that are able to afford new homes is largely affected by the state’s median new home prices. And too often, more affordable markets does not mean that housing is equally affordable to all ethnic groups.
As indicated in the chart below, the higher the home price is, the smaller the number of households that can afford new homes. In Nebraska, where the median new price is $288,401, the share of non-Hispanic white households that could afford new homes is 25 percentage basis points larger than the share of Black households, and 14 percentage basis points larger than Hispanic households. However, this gap is much smaller in Hawaii, with a new median home price of $672,314. In Hawaii, 30% of non-Hispanic white households are able to qualify for a mortgage for a new median priced home, compared with 21% for Black households and 20% for Hispanic households.
The housing affordability story is also a reflection of underlying income data. Income plays a key role in housing affordability, in terms of budget and mortgage qualification. According to the 2019 American Community Survey, the median household income for non-Hispanic white households was $71,664, significantly higher than the $43,862 for Black households. The differences of income distribution among race/ethnicity are large, as shown in the figure below. Thirty percent of Black households have household income below $25,000 compared to 15.5% of non-Hispanic white households. Around 17.6% of non-Hispanic white households earn more than $150,000 while only 7% of Black households do.