Why Does Every Home Feel Expensive? A Look at New Hampshire’s Affordability Index

If you’ve been house hunting in New Hampshire lately, you’ve probably had this thought: Why does everything feel so expensive? You’re not imagining things—homes really are significantly less affordable than they were five or ten years ago. But why? The answer lies in the Affordability Index.

What Is the Affordability Index?

The Affordability Index is a key metric used to determine how financially accessible homes are for the average buyer. It measures whether a typical family can afford the monthly mortgage payment on a median-priced home, assuming they make the area’s median household income. A higher index means homes are more affordable, while a lower index signals that affordability is declining.

The National Association of Realtors (NAR) defines an affordability index of 100 as the breakeven point—meaning a household earning the median income has just enough to afford a median-priced home with a standard 20% down payment. If the index is above 100, homes are relatively affordable. Below 100? Buyers are being squeezed.

How Has the Affordability Index Changed in New Hampshire?

Let’s rewind a decade to 2014. Back then, the affordability index in New Hampshire was roughly 175, meaning the typical household had 75% more income than necessary to afford a median-priced home. Fast forward to today, and that number has plummeted to somewhere between 80 and 90—a drastic drop in affordability.

That’s a huge shift in just ten years. But why?

Prices Have Soared, But Incomes Haven’t Kept Up

A big reason homes feel so out of reach is that home prices have skyrocketed, while median household incomes in New Hampshire haven’t grown at nearly the same rate. Here’s a breakdown:

• In 2014, the median home price in NH was around $230,000.

• By 2024, that number has surged to $450,000 or more.

• Meanwhile, the median household income has increased, but nowhere near as fast—rising from roughly $65,000 in 2014 to about $90,000 in 2024.

That means homes have nearly doubled in price, while incomes have only increased by about 38%. And that’s not even factoring in rising mortgage rates, which make monthly payments significantly higher than they were during the ultra-low-rate years of 2020-2021.

Higher Mortgage Rates Are Making It Worse

If home prices alone weren’t enough of a challenge, mortgage rates have added fuel to the fire. Just a few years ago, buyers could lock in 2-3% interest rates, making even pricier homes more manageable. But today? Rates are hovering around 7%—more than doubling what they were at their lowest.

Let’s put that into perspective:

• A $400,000 mortgage at 3% = About $1,686/month (principal & interest).

• The same mortgage at 7% = About $2,661/month—that’s almost $1,000 more every month!

That’s why even if home prices stayed the same, today’s buyers feel the pinch much more than those who purchased five or ten years ago.

What Can Buyers Do in This Market?

While it’s easy to feel discouraged, there are still ways to navigate the affordability crunch:

1. Consider Alternative Loan Options – FHA, VA, or other low-down-payment programs can help buyers get in the door without needing 20% down.

2. Work with a Local Lender – National banks aren’t always the best bet. A local lender can help you find programs specifically tailored for NH buyers.

3. Expand Your Search – Certain towns or neighborhoods may offer better affordability, especially if you’re open to some minor cosmetic updates.

4. Buy the Payment, Not Just the Price – Instead of focusing only on the sticker price, work with a lender to determine what monthly payment you’re comfortable with. The right home is one that fits your budget and lifestyle.

   
   

The Bottom Line

New Hampshire’s affordability index has taken a hit over the past decade, making homeownership feel out of reach for many buyers. The combination of rapid price appreciation, sluggish income growth, and higher mortgage rates has made affordability a real challenge. But with smart strategies, education, and the right guidance, there are still ways to make homeownership a reality in today’s market.

Thinking about buying but feeling overwhelmed? Let’s chat about your options and find a plan that works for you!