Median-priced homes and condos are less affordable than historical averages in 99% of U.S. counties around the nation with enough data to analyze. That's according to ATTOM's Q3 2024 U.S. Home Affordability Report, released today.
The report also acknowledged that major expenses on median-priced homes currently consume 33.5% of the average national wage. While that figure is a slight improvement over Q2 2024 (34.7%), it remains virtually unchanged from a year ago. The expense-to-wage ratio exceeds the common 28% lending guideline, assuming a 20% down payment. in 78.4% of the counties analyzed by ATTOM.
The third-quarter figures "represent ongoing markers of how home ownership remains a financial stretch for average workers around the nation," the report reads, including that the national median home price has spiked to $365,000 this quarter and mortgage rates remain above 6%.
The latest national median home price figure represents a 1.4% increase over Q2 2024 and is 6.6% above the typical price in the third quarter of 2023, although the pace of increase has slowed.
The biggest year-over-year increases in median prices during Q3 2024 are in Wayne County (Detroit), Mich. (up 12.3% annually); Suffolk County (Long Island), N.Y. (up 12.1%); and Philadelphia County, Pa. (up 11.8%).
Counties with a population of at least 1 million where median prices remain down the most from Q3 2023 to the same period this year are Alameda County (Oakland), Calif. (down 12.8%); Travis County (Austin), Texas (down 4.3%); and Honolulu County, Hawaii (down 3.9%).
“Home affordability continues to show signs of easing, which lightens the pressure on house hunters struggling to find a place that fits their budget,” said Rob Barber, CEO of ATTOM. “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 noted that last week’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.”
Annual Wages Can't Keep Up With Affordability
Amid falling mortgage rates, the portion of average local wages consumed by major expenses on median-priced single-family homes and condos has dropped quarterly in 426, or 73.7%, of the 578 counties analyzed. 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.
The typical $2,045 cost of mortgage payments, homeowner insurance, mortgage insurance, and property taxes nationwide is down 3.3% quarterly from a high point hit in Q2 2024.
In about a third of the markets analyzed, major expenses consume at least 43% of average local wages, a benchmark considered seriously unaffordable.
Major home ownership expenses on typical homes sold during Q3 2024 require an annual income of $87,640 to be affordable, which is 19.8% more than the latest average national wage of $73,164. Annual wages of more than $75,000 are needed to pay for major costs on median-priced homes purchased during Q3 2024 in 324, or 56.1%, of the 578 markets in the report.
The 25 largest annual wages required to afford typical homes remain along the east or west coasts, led by San Mateo County, Calif. ($384,882); New York County (Manhattan), N.Y. ($371,140) and Santa Clara County (San Jose), Calif. ($360,069).
The lowest annual wages required to afford a median-priced home in the third quarter of 2024 are in Cambria County, Pa. ($20,775); Schuylkill County, Pa. ($29,959) and Montgomery County, Ala. ($30,746).
Historical Affordability Still Weak Overall
Homeownership is less affordable in Q3 2024 compared to historic averages in 99.5% of the 578 counties analyzed, about the same as the level in both Q2 2024 and Q3 2023 - and far higher than the 5.4% portion in the first quarter of 2021.
Counties with a population of at least 1 million that are less affordable than their historic averages (indexes of less than 100 are considered historically less affordable) include Wayne County, Mich. (index of 60); Mecklenburg County, N.C. (63) and Fulton County, Ga. (64).
Overall, counties with the worst affordability indexes in the third quarter of 2024 are Montgomery County, Pa. (index of 52); Muskegon County, Mich. (53), and Blount County, Tenn. (54).
