Oxford Economics: US Housing Affordability Risks Amid Rising Costs & Mortgage Rates

Oxford Economics' Q1 2026 Real Estate Price Index hit 77.9. Affordability faces risks from rising home & mortgage rates, and insurance costs. Property owner insurance inflates index, while low market turnover adds to housing scarcity despite some affordability gains.

The economic advising company’s latest Real estate Price Index was gauged at 77.9 in the very first quarter of 2026. Over the next 10 years, Oxford forecasts three different scenarios for its index based upon just how home costs and mortgage prices shift:

Impact of Homeowner Insurance on Affordability

The current surge in property owners insurance coverage prices, specifically in states like Florida, is also having an effect on price. If Oxford were to remove property owners insurance policy from its estimations, the national index would increase from 77.9 to 83.5, claimed Nancy Vanden Houten, U.S. lead economic expert at Oxford Economics and the author of the report.

According to First American’s most current home price index information, price boosted in 91 of the 100 largest markets in between February and March, a slight decline from the previous month when all 100 markets posted renovations.

Persistent Affordability Misalignment & Market Turnover

While boosting, affordability misalignment lingers: That difference of Americans staying in markets that aren’t economical for them is echoed in various other records, like in one from NAR and Realtor.com featuring a listing-income score.

“I believe a lot more turn over in the existing market would enhance real estate price. Yet that would simply unlock existing supply and doesn’t attend to the underlying scarcity of housing systems,” Vanden Houten said in an e-mail to Real Estate Information.

Key Factors Driving Housing Affordability

Oxford’s price index aspects in a range of costs, “real estate price is generally driven by home prices, mortgage prices, and household revenue,” Vanden Houten added. “Greater than two times as numerous Americans live in the leading 10 states with the highest possible home price-to-income proportions compared to the 10 states with the most affordable price-to-income proportions, where homebuying is a lot more budget-friendly.”

Oxford additionally makes use of a different step of earnings than NAR that’s based on the united state Demographics Bureau’s American Neighborhood Study, resulting in a reduced estimate, the record kept in mind. In 2024, as an example, Oxford pegged the typical revenue at $81,604, while NAR’s estimate was $101,360.

Affordability Gains Remain Vulnerable to Market Shifts

“The real estate market went into the springtime season with stronger cost basics than a year back, yet the current rebound in home loan prices is a tip that affordability gains stay at risk to changes in financial markets and the wider financial atmosphere,” Fleming stated.

The record estimates that the turn over of existing owner-occupied supply averaged 4.7% over the past year, jumping around degrees seen around 2009-2012 during the global financial meltdown. On the other hand, the turnover price in 2020 was around 8%.