Property data curator ATTOM released its third-quarter 2024 U.S. Home Affordability Report showing median-priced single-family homes and condos remained less affordable in the third quarter compared with historical averages in 99 percent of counties around the nation with sufficient data to analyze.
The latest trend continues a pattern, dating back to early 2022, of homeownership requiring historically large portions of wages as home prices keep reaching new highs.
ATTOM data also showed major expenses on median-priced homes currently consume 33.5 percent of the average national wage. That level marks a slight improvement over the second quarter but remains virtually unchanged from a year ago – and still above the common 28 percent lending guideline.
Despite small gains in both the historic and current affordability measures, the third-quarter figures represented ongoing markers of how homeownership remains a financial stretch for average workers around the nation, ATTOM said. They come as the national median home price has spiked to $365,000 and mortgage rates, while declining, remain above 6 percent, helping to keep ownership expenses above what lenders prefer when issuing mortgages.
“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, said in a release. “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.”
The portion of average wages nationwide required for typical mortgage payments, property taxes and insurance still sits 12 points above a low point reached early in 2021, right before home-mortgage shot up from the lowest levels in decades, according to ATTOM.
Barber added September’s half-point cut in the benchmark interest rate by the Federal Reserve “should brighten the prospects for buyers, as long as it doesn’t spike demand too much and lead to even higher prices amid the ongoing tight supply of homes for sale around the U.S.”
On the downside for house hunters are home prices and property taxes that continue to rise across the country, helping to keep affordability at historical lows. At the same time, though, a steady decline in home-mortgage rates, from more than 7 percent down to close to 6 percent, is acting as a counterweight, the ATTOM report indicated. In addition, the national median home increased at a slower pace in the third quarter versus the prior three months.
The result over the summer months has been a 3 percent decrease in the typical cost of major homeownership expenses at a time when average wages have grown. That combination is pushing affordability back in a better direction for house hunters. While major expenses as a portion of wages is unchanged annually, it has declined for the second straight quarter, ATTOM said.
The report determined affordability for average wage earners by calculating the amount of income needed to meet major monthly homeownership expenses — including mortgage payments, property taxes and insurance — on a median-priced single-family home and condo, assuming a 20 percent down payment and a 28 percent maximum “front-end” debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the U.S. Bureau of Labor Statistics.
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. That is mostly unchanged from both the second quarter of 2024 and the third quarter of 2023, when 574 of the same counties were historically unaffordable.
The portion of average local wages consumed by major homeownership expenses on typical homes were considered unaffordable during the third quarter in about 80 percent of the 578 counties in the report, based on the 28 percent guideline. Counties with the largest populations that were unaffordable in the third quarter were Los Angeles County, Calif.; Cook County (Chicago), Ill.; Maricopa County (Phoenix), Ariz.; San Diego County, Calif., and Orange County, Calif. (outside Los Angeles).
The most populous of the counties with affordable levels of major expenses on median-priced homes during the third quarter were Harris County (Houston), Texas; Wayne County (Detroit), Mich.; Philadelphia County, Pa.; Cuyahoga County (Cleveland), Ohio, and Allegheny County (Pittsburgh), Pa.