Hitting the roof

New report hammers Austin among least affordable metros for new homes

New report hammers Austin among least affordable metros for new homes

New home construction
Sixty percent of new home buyers in the Austin area are being priced out.  Courtesy photo

Residents of Austin and the entire country continue to struggle with the rising cost of housing. Increasingly, the American dream of buying a new home is slipping out of reach.

And in somewhat unsurprising news, the Capital City is among the metros where it is becoming more difficult for homebuyers to get a foot on the housing ladder, particularly when it comes to newly built homes.

data analysis released October 28 by homebuying and home-selling platform Knock shows only 40 percent of Austin households can afford to purchase a newly constructed home in the region. The Austin area ties for seventh place among the metros with the most households (60 percent) being priced out of the market for brand-new homes.

To make matters worse, Austin ranked third for the largest gap ($126,192) between the median price of a newly built home ($499,450) and the median price of an existing home ($373,258). And with an average down payment on a newly built home totaling $22,395, buyers of a brand-new Austin home would need a median household income of $76,497.

To determine new construction affordability in the major metro areas across the country, Knock examined the 50 largest metro areas and analyzed the average percentage of new-construction transactions. Any metros below the average of 8 percent were eliminated from the analysis. That left 22 major metro areas.

To qualify for a mortgage on a $390,900 home, the median price of a new home sold in the U.S. in August, a buyer making a 6 percent down payment (the national average) would need an annual household income of just under $80,000, Knock says. This means just 40 percent of Americans would be eligible, based on the 2020 national median household income of $67,521.

“This analysis highlights how years of building undersupply and the current supply shortages are disproportionately impacting lower income homebuyers looking for alternatives in a housing market where homes are garnering multiple offers and selling for over asking price,” Sean Black, co-founder and CEO of Knock, says in a news release. “Although more new homes are expected to come onto the market in 2022, wages have not kept up with home price growth, keeping new construction out of reach for many, especially first-time buyers who don’t have the benefit of equity from a home sale.”

Though new Austin homes are becoming increasingly less affordable, just down the road in San Antonio, there’s a ray of hope. San Antonio ranks first among major metro areas for the affordability of brand-new homes. The analysis shows 51 percent of San Antonio-area residents can afford a newly built home.

Knock found the median price of an existing home there stood at $297,000 in August. That was $9,200 below the median price of a newly constructed home. With an average 6 percent down payment totaling $18,372, the buyer of a brand-new home in San Antonio would need a median household income of $64,707, slightly above the actual median household income of $62,355.

Dallas-Fort Worth tied for fifth place with Atlanta for the most major-metro households (48 percent) able to afford a newly built home, according to the Knock analysis. Houston landed at No. 6 (46 percent).

Miami appears atop the list of metro areas for the share of households (80 percent) priced out of the market for newly built homes.