When it comes to home price-to-income ratios, NH counties above the norm

Household incomes haven’t grown at the same rate as home prices here in New Hampshire. As a result of this growing disconnect, the price-to-income ratio in each of the state’s 10 counties is one and a half to two times what it should be.

An analysis of household median income in the state, versus the most recent median priced single-family home in each county shows an unaffordable trend for the last several years.

(Click to enlarge)

The chart at right shows the median income in each county, per government data. And it shows the median price of a single-family home in each county as of May, per data from the New Hampshire Association of Realtors (NHAR). And it shows the price to income ratio, which is calculated by dividing the median house price in a specific area by the median household income.

Among economists, a ratio of 3 or less is generally considered affordable, while a ratio above 5 is considered unaffordable. The ratio is considered a reliable indicator of the state of a housing market as it shows whether income growth is keeping pace with rising home prices. In this case, it offers a granular view of the challenges facing home buyers throughout New Hampshire.

The NHAR provides monthly data on all kinds of markers related to how well or how poorly the residential real estate market is doing. For instance, days on market shows how quickly property sells for; the median price is a regular barometer of the cost of buying a house or condominium; and the affordability index is a measure of what it takes in a given market to purchase a house.

The NHAR’s affordability index in May for a single-family home was 55. The index is based on 100, meaning that a household would have just the right amount of money to afford a house in a particular area. An index of 55 means the average earning household in the state would only have just more than half of the money needed to afford a house.

But the NHAR does not break down the affordability index on a county by county basis.

So a county by county breakdown by price to income ratios gives us a look at the challenges of buying a home in each of New Hampshire’s counties.

The most affordable county, given the chart above, is Cheshire with an index of 4.5. The least affordable county is Rockingham, with an index of 6.2, this despite the fact that Rockingham has the highest household income average in the state at about $114,000 annually. But it also consistently has the highest median price for a single-family house, now approaching almost a quarter of a million dollars.

Rockingham’s medians are driven in large part by the very pricey real estate in the Seacoast region. In May, 30 of the 70 transactions there were for more than $1 million. The May monthly median sale price reached $877,500 for a single-family home in the region, the highest since October 2024 and up 1.4% from last year.

New Hampshire ranks 17th among all states in terms of high-to-low ratios, according to a recent analysis by Construction Coverage, a company that specializes in researching and analyzing the construction industry, with a particular emphasis on software, insurance, and related services.

Its data for the Granite State included a statewide household income of $96,838. It used a statewide median home price of $480,212 but did not specify whether “home” meant a single-family or a combination of single-family and condo.

New Hampshire’s 17th place ranking was for a price to income ratio of 5. At the top of the list were Hawaii (8.8) and California (8.2). At the bottom of the list were West Virginia (2.9) and Iowa (3).

Among other New England states, Massachusetts was 6.3 (ranked 4th), Rhode Island was 5.5 (ranked 12th), Maine was 5.3 (ranked 15th), Vermont was 4.6 (ranked 22nd), and Connecticut was 4.4 (ranked 24th).

The Construction Coverage data shows the median home price in New Hampshire has grown by 67.3% in the last five years and that 28.1% of mortgage holders spend more than a third of their income on housing.

A Construction Coverage analysis from 2024 shows a home price to income ratio of 5.1 based on a median home price of $455,000 and a household income of $90,000. Its analysis from 2021 shows a ratio of 5.0 based on a median home price of $386,000 and income of $78,000.

Based on 2022 data, the Joint Center for Housing Studies at Harvard University prepared a report titled “Home Price-to-Income Ratios Reaches Record High.”

Underscoring the anxiety about home prices versus income and what it’s doing to the residential real estate market is a new report from Bank of America that shows 60% of home buyers can’t tell whether now is a good time to buy a home or not, compared to 48% two years ago.

There’s some hope in the BofA analysis. Three out of four (75%) expect home prices and interest rates to fall and are waiting until then to buy a new home, up from 62% in 2023.

Especially for Gen Z (the eldest of whom are 28 now) and millennials (currently between the ages of 29 and 44), three out of every four say owning a home is a milestone achievement.

“With so many factors impacting the homebuying market, prospective buyers and current homeowners are left wondering what it all means for them,” Matt Vernon, head of consumer lending at Bank of America, said in a statement with the report timed to the fact that June is National Homeownership Month.

“As our research shows, a majority of buyers feel the market is headed in the right direction, but many are still planning to wait for more favorable conditions before they decide to take action,” Vernon added.