Homes are less affordable than historical averages in nearly the entire country, according to the latest data from ATTOM. Single-family homes and condos are more affordable than historical averages in just 1% of the 578 analyzed U.S. counties.
The third quarter 2024 U.S. Home Affordability Report highlights that homeownership is increasingly requiring a larger portion of wages amid rising home prices. The expenses on a median-priced home currently requires 33.5% of the average national wage, well above the common 28% lending guideline.
The national median home price spiked to $365,000 in the third quarter with rates above 6%, according to ATTOM, helping keep homeownership expenses above what lenders prefer when issuing mortgages. While still growing, the rate of growth of median national home prices was slower in the third quarter than the second quarter.
As a result, the report indicates that the typical cost of major homeownership expenses have declined by 3% at a time when average wages have grown nationwide.
“Home affordability continues to show signs of easing, which lightens the pressure on house hunters struggling to find a place that fits their budget,” Rob Barber, CEO for ATTOM, says. “The cost of owning a home across much of the nation remains a tough go for average workers, exceeding levels preferred by banks and other lenders. But it is at least tracking in the right direction. That’s mainly because of declining interest rates.”
Barber said the Fed’s 50-basis point cut to the federal funds rate should benefit prospective buyers as long as demand does not “spike.” In such a scenario, prices would climb even higher, challenging prospective buyers even amid a softer rate environment.
The report calculates affordability for average wage earners by calculating the amount of income needed to meet major expenses—including mortgage payments, property taxes, and insurance—on a median-priced home assuming a 20% down payment and a 28% maximum debt-to-income ratio. Compared to historical levels, median homeownership costs in 575 of the 578 counties analyzed in the third quarter are less affordable than in the past.
Counties with the largest populations that are unaffordable in the third quarter include Los Angeles County; Cook County (Chicago), Illinois; Maricopa County (Phoenix), Arizona; San Diego County, California; and Orange County, California.
The most populous counties with affordable levels of home expenses in the third quarter include Harris County (Houston), Texas; Wayne County (Detroit), Michigan; Philadelphia County, Pennsylvania; Cuyahoga County (Cleveland), Ohio; and Allegheny County (Pittsburgh), Pennsylvania.
