A key measure of U.S. housing affordability worsened for the first time in almost three years, as higher borrowing costs soaked up a bigger chunk of earnings for new homebuyers.

Monthly payments on a median-priced $410,700 home accounted for 34% of a typical family’s income in the second quarter of this year, according to data published Thursday by the National Association of Home Builders and Wells Fargo. That’s up from 32% in the first quarter, and it reverses part of the most recent improvement recorded since early 2025.

Thirty-year mortgage rates climbed steeply in the period, as the U.S. war with Iran drove borrowing costs higher across the economy, and they’re now close to a one-year high at around 6.8%. A 2% increase in median new-home prices during the quarter added to the squeeze, the builders association said

“Buyers faced high mortgage rates and economic uncertainty, while builders dealt with rising construction costs, unnecessary regulatory burdens and labor shortages,” NAHB Chairman Bill Owens, an Ohio builder, said in a release.

New-home sales that were hot four years ago have flattened more recently, forcing homebuilders to offer costly sales incentives or so-called buydowns of mortgage rates. A recent Bloomberg Intelligence survey of investment professionals showed 70% expect starts of single-family homes to decline this year.

The NAHB data is based on a median family income of about $107,000. Households earning half of that amount had to spend 67% of their earnings to cover the same new home’s mortgage costs, the group said.

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