Recent data from the Federal Reserve Bank of Atlanta’s Home Ownership Affordability Monitor (HOAM) shows that homeownership affordability has dropped significantly across North Carolina since 2019. Once a state where median-income households could afford median-priced homes in most metropolitan areas, North Carolina now sees affordability fall below the threshold in nearly every market.

Home Prices and Affordability Trends

Home prices in North Carolina, like much of the nation, grew substantially during the pandemic. The HOAM Index measures a median-income household’s ability to afford a median-priced home, accounting for principal, interest, property taxes, homeowner’s insurance, and private mortgage insurance. Scores of 100 or above indicate affordability, while scores below 100 indicate that homes are out of reach for median-income families.

Declining Affordability Across North Carolina Metros

In January 2019, 12 of North Carolina’s 15 metropolitan areas had HOAM Index values above 100, meaning most median-income families could afford median-priced homes in those markets. Only Wilmington, Durham-Chapel Hill, and Asheville fell below that mark at the time. By January 2025, only Rocky Mount remained just above the affordability threshold; the other 14 metros had dropped below 100, signaling widespread unaffordability for median-income households.

Markets With Greatest Decline

Asheville is now the least affordable market in the state, with a 2025 affordability score of just 55. The metros that saw the largest declines from 2019 to 2025 include Hickory-Lenoir-Morganton, Greensboro-High Point, Winston-Salem, and Burlington, all showing significant drops in affordability.

Decline Mirrors State Trends

The affordability challenges in North Carolina align with a nationwide decline. The national HOAM Index score fell from 98 in January 2019 to 64 in January 2025. This decrease reflects the impact of rising home prices combined with higher mortgage rates, squeezing many potential buyers out of the market.

Role of Interest Rates and Home Prices

Early in the pandemic, historically low interest rates increased purchasing power, enabling more households to buy homes, which contributed to rising prices. However, as the Federal Reserve increased rates to combat inflation, borrowing costs surged while home prices remained elevated. This disconnect between incomes, prices, and financing conditions has significantly reduced affordability for new buyers.

Implications of Declining Affordability

Reduced homeownership affordability affects local labor markets by pricing workers out of living near employment centers. It also limits wealth-building opportunities for renters hoping to become homeowners. Additionally, homeowners with low-rate mortgages may hesitate to move, as rising prices and mortgage rates make upsizing, downsizing, or relocating more expensive. This hesitancy further worsens housing supply shortages in North Carolina.

Economic and Mobility Challenges

Together, these factors reveal that declining homeownership affordability is not just an individual household issue but a broader economic and social challenge. It impacts economic stability and mobility across North Carolina, underscoring the need for policies and actions to address housing affordability and availability statewide.