Puerto Rico housing affordability declines amid rising prices, tariffs
Puerto Rico’s housing affordability continues to worsen, with new data from Estudios Técnicos Inc. (ETI) showing a steep decline in the Housing Affordability Index by the end of 2024.
Rising interest rates, elevated home prices and tariff-driven construction costs are putting homeownership further out of reach for many residents, the economic analysis firm reported.
The index dropped from 58% in the fourth quarter of 2023 to 53% in the fourth quarter of 2024, with an annual average of 57% — down from 65% the previous year.
“There is no doubt that the affordability problem continues to deepen, and that is worrying,” said Leslie Adames, director of Economic Analysis and Policy at ETI. “People interested in obtaining a mortgage loan only had 57% of the income required by financial institutions to qualify.”
ETI’s Housing Affordability Index reflects whether a typical family can afford a mortgage on a median-priced home with a 20% down payment. A score of 100% means the family has enough income to qualify; anything below signals financial stress in accessing housing.
Adames noted that while 30-year fixed mortgage rates decreased from 7.06% in May to 6.72% in December 2024, they remain well above the 4.04% pre-pandemic average.
“The fact that long-term interest rates continue to experience upward pressure and that the lack of housing inventory persists does not suggest room for affordability to normalize to pre-pandemic levels,” he said.
From 2011 to 2019, the average index stood at 84%, helped by lower rates and a more available housing stock.
Home prices continued to rise in 2024. The average price of new units sold increased 18.4% to $367,716, while used homes rose 12.8% to $212,811, based on data from the Office of the Commissioner of Financial Institutions. Meanwhile, the number of units sold declined by 7.5%, totaling 9,996 — 814 fewer than in 2023.
Price pressure is expected to intensify. Adames said construction costs are rising due to tariffs imposed by the Trump administration in early 2025 — specifically a 25% duty on steel and aluminum — with potential hikes up to 50% recently announced.
“A stabilization in housing prices is not foreseeable in the short term,” he said. “The housing shortage, combined with the rising cost of materials, is pushing prices higher.”
The findings reflect a challenging environment for prospective homebuyers in Puerto Rico, especially those with limited access to financing. According to ETI, with affordability near record lows and construction costs rising, the path to homeownership may continue to narrow in the near term.
