According to a new study, the percentage of potential borrowers who can meet the requirements for drawing a mortgage on a new home at average price is far lower for Black and Hispanic families than it is for White and Asian consumers.
While 56% of Asian households and 44% of whites are eligible to buy a new home for $ 346,577, only 32% of Hispanic consumers and 24% of black families do, the National Association of Home Builders said in a released Tuesday Report with.
These differences pose a challenge to federal efforts to increase home ownership fairly. This may require policy intervention, such as a reduction in mortgage insurance premiums, which could make credit more accessible to lower-income borrowers.
"[The gaps] persist in all states and are actually larger in states where new home prices are relatively affordable," NAHB senior economist Na Zhou said in the report.
While new homes make up a smaller portion of the US market than resales and tend to be more expensive given the recent high cost of materials, they are becoming increasingly important given the imbalance between supply and demand.
However, as prices rise, newly built homes are likely to become increasingly inaccessible to many borrowers, especially those on lower incomes. A higher proportion of these consumers are found in black and Hispanic communities, as the NAHB's analysis of census data shows.
While the proportion of borrowers excluded from the new home market due to affordability concerns is particularly pronounced for black and Hispanic borrowers, the number of those excluded by rising house prices is significant for all groups, the NAHB found.
For example, if prices rose by $ 1,000, funding would be out of reach for 106,278 white families and 15,840 black households.
"The number of households being forced out of the market due to a $ 1,000 surge varies across races / ethnic groups, but is more or less proportional to population size," the NAHB economist noted in the report.