Property data curator ATTOM released its second-quarter 2024 U.S. Home Affordability Report showing median-priced single-family homes and condos remained less affordable in the second quarter of 2024 compared with historical averages in 99 percent of counties with enough data to analyze.
The latest trend continued a pattern, dating back to early 2022, of homeownership requiring historically large portions of wages around the country amid ongoing high residential mortgage rates and elevated home prices.
Data also showed major expenses on median-priced homes consumed 35.1 percent of the average national wage in the second quarter – marking the highest point since 2007 and standing well above the common 28 percent lending guideline.
“The latest affordability data presents a clear challenge for home buyers. While home prices are increasing and mortgage rates remain relatively high, these factors are making homes less affordable,” Rob Barber, CEO for ATTOM, said in a release. “It’s common for these trends to intensify during the spring buying season when buyer demand increases. However, the trends this year are particularly challenging for house hunters, more so than at any point since the housing market boom began in 2012. As the 2024 buying season progresses into the summer, we will continue to monitor the data closely.”
Both the historic and current measures represented quarterly and annual setbacks following a brief period of improvement from late 2023 into early 2024. The shifts came as the national median home price spiked to a new high of $360,000 during the spring buying season and mortgage rates remained around 7 percent, leading to increases in the cost of owning a home that outpaced recent increases in wages.
As a result, the portion of average wages nationwide required for typical mortgage payments, property taxes and insurance grew about three percentage points from both the first quarter of this year and the second quarter of last year.
The patterns during the months running from April through June came as the national median home price rose 7.3 percent quarterly and 4.7 percent annually. Further hampering buyers during the second quarter were average 30-year home-mortgage rates that ended the quarter at about 6.9 percent, or more than double where they stood in 2021, ATTOM added.
Those factors helped boost homeownership expenses by about 10 percent in the second quarter after declining slightly in the prior two quarters.
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, 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 582 of the 589 counties analyzed in the second quarter were less affordable than in the past. That number was up just slightly from 579 of the same counties in the first quarter of this year and from 577 in the second quarter of last year. But it was more than 15 times the figure from early 2021.
Meanwhile, the portion of average local wages consumed by major homeownership expenses on typical homes was considered unaffordable during the second quarter in about 80 percent of the 589 counties in the report, based on the 28 percent guideline.
Counties with the largest populations that were unaffordable in the second 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 115 counties with affordable levels of major expenses on median-priced homes during the second quarter were Harris County (Houston), Texas; Wayne County (Detroit), Mich.; Philadelphia County, Pa.; Cuyahoga County (Cleveland), Ohio, and Allegheny County (Pittsburgh), Pa.