Affordability conditions across the United States have worsened as home prices, elevated inflation, and high interest rates continue to impact prospective home buyers.
According to real estate data provider ATTOM Data Solutions, median-priced single-family homes and condos were less affordable in the first quarter compared with historical averages in 94% of counties in the country. A year ago, 62% of counties were less affordable than historical averages.
The least affordable counties with populations of at least 1 million include Texas’ Collin County and Tarrant County; Hillsborough County, Florida; and Mecklenburg County, North Carolina.
The large percentage of average wages required for typical homeownership expenses is a significant factor to the affordability conditions facing buyers. According to ATTOM, the portion of wages required for homeownership expenses nationwide fell 1 percentage point to 30% during the first quarter, but remains “unaffordable” by common lending standards. Major home expenses exceeded 28% of wages for the average worker in two-thirds of the counties analyzed by ATTOM.
Compared with fourth quarter 2022, the median single-family home and condo price increased 1% to $320,000. On a year-over-year basis, prices increased the most in Missouri’s St. Louis County (38%) and Florida’s Palm Beach County (11%).
Three-quarters of the markets analyzed by ATTOM reported prices declined on a quarter-over-quarter basis. The largest year-over-year price declines occurred in California’s Alameda County (16%) and Santa Clara County (12%).
While price growth has either stagnated or declined in many markets in the country, wages have increased 6% nationwide on a year-over-year basis, according to ATTOM. Furthermore, wages are growing faster than median prices in 76% of the markets analyzed by ATTOM.
“The soaring housing market has finally come back down in much of the U.S., at least for now, while workers’ pay is growing. That’s produced some benefits for home seekers in the form of slightly better affordability, especially as lending rates have flattened out,” says Rob Barber, CEO for ATTOM. “Things certainly haven’t swung way back into friendly territory. Price drops and wages gains haven’t yet translated into equal improvements in affordability. And the trend could go back the other way if interest rates go up again, as expected.”
ATTOM determined the affordability for average wage earners by calculating the amount of income needed to meet major home expenses assuming a 20% down payment and a 28% maximum “front-end” debt-to-income ratio. Applying these parameters, median home prices in 537 of 572 counties were less affordable in 2023 than historical levels. During the first quarter of 2021, just 91 counties were less affordable than historical levels.
According to ATTOM, Illinois’ Cook County, Texas’ Harris County, Michigan’s Wayne County, and Pennsylvania’s Philadelphia County are the most populous areas where major expenses on median-priced homes remain affordable for average workers.
