Author: Maggie Smith
Our recent LEAD Feed article showed that home prices grew substantially in North Carolina and the nation during the pandemic. This article examines data from the Federal Reserve Bank of Atlanta's Home Ownership Affordability Monitor (HOAM) to understand how homeownership affordability for current homebuyers has changed since 2019. The HOAM Index produces a monthly measure of a median-income household’s ability to afford a median-priced home, factoring in median existing home sales price, principal and interest payments, property taxes, homeowner’s insurance, and private mortgage insurance. Values of 100 or above indicate a median-income family could afford a median-priced home, while values below 100 indicate a median-income family would not be able to afford a median-priced home.
Key Findings
Homeownership affordability has declined across North Carolina’s 15 metropolitan areas when comparing HOAM Index values from January 2019 to January 2025 (Figure 1). This is consistent with a decrease in homeownership affordability nationwide, with an index score of 98 in January 2019 to 64 in January 2025 for the nation.
In 2019, 12 of the 15 metropolitan areas had index values above 100, indicating that median-income families could afford median-priced homes in most markets across the state. Only three areas— Wilmington, Durham-Chapel Hill, and Asheville—fell below the affordability threshold in 2019.
By 2025, affordability has shifted dramatically. Only one metropolitan area, Rocky Mount, maintained a value just above the affordability threshold. The remaining 14 metro areas dropped below 100, signaling that buying a home has become unaffordable for median-income households in nearly every metropolitan area market in North Carolina.
Asheville stands out as the least affordable market in the state, with an affordability score of just 55 in 2025. The metros with the largest declines in affordability from 2019 to 2025 are Hickory-Lenoir-Morganton, Greensboro-High Point, Winston-Salem, and Burlington.
Figure 1
Conclusion
The HOAM Index data from the Federal Reserve Bank of Atlanta provides evidence of a decline in housing affordability for current homebuyers across North Carolina. The most significant finding is the shift from a state where median-income households could afford median-priced homes in most metropolitan areas to one where such households can only afford homes in a single market.
As discussed in our previous LEAD Feed article, historically low interest rates early in the pandemic expanded purchasing power, enabling more households to buy homes and contributing to rising prices. However, as mortgage rates rose in response to the Fed’s efforts to combat inflation, borrowing costs surged while home prices remained elevated. This has significantly reduced affordability for new buyers, creating a disconnect between incomes, prices, and financing conditions.
This decline in affordability has broad implications. First, reduced homeownership affordability can affect local labor markets, as workers may be increasingly priced out of living near employment centers. Additionally, reduced access to homeownership can limit wealth-building opportunities for renters aspiring to buy a home. Finally, homeowners, particularly those locked in at low interest rates, may hesitate to move, as higher prices and mortgage rates have made it more costly to upsize, downsize, or relocate. This further exacerbates our housing supply issues in North Carolina.
Together, these dynamics highlight how declining homeownership affordability not only challenges individual households but also affects broader economic stability and mobility across North Carolina.