The National Association of Realtors (NAR) and the website Realtor.com operated by Move, Inc., have issued a report saying that there aren’t enough homes on the market that are affordable to middle-income buyers. NAR believes that the U.S. housing market is short more than 300,000 homes priced so that people earning $75,000 a year or less are able to buy them. The analysis finds that inventory shortages impact middle-income buyers more than any other income bracket.
The report says that a balanced market would have half of all available homes fall within the price range that would make them affordable to middle-income buyers.
“Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through home ownership,” said Nadia Evangelou, NAR senior economist and director of real estate research. “A two-fold 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.”
Evangelou said that the U.S. needs to have at least two homes affordable for middle-income buyers for every one home affordable for upper-income buyers.
“Even with the current level of listings, the housing affordability and shortage issues wouldn’t be so severe if there were enough homes for all price ranges,” Evangelou said.
The NAR said that approximately 1.1 million homes were available for sale nationwide this past April, an increase of 5% from a year ago. Its analysis found that the market needed to add 320,000 homes priced at $356,000 and under in order to serve the demand from buyers who earned up to $75,000. The NAR found that middle-income buyers can afford to buy only 23% of listings in the current market. Five years ago, this income group could afford to buy 50% of all available homes, approximately 810,000 of the approximately 1.6 million properties listed for sale at that time.
Danielle Hale, the chief economist at Realtor.com, said, “Ongoing high housing costs and the scarcity of available homes continues 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.”
