Home Affordability Worsens Again in Q4
Major Home-Ownership Expenses Consume 34% of National Average Wage
by ATTOM Staff
ATTOM released its fourth-quarter 2024 U.S. Home Affordability Report showing that median-priced single-family homes and condos remain less affordable in the fourth quarter of 2024 compared to historical averages in 98% of counties around the nation with enough data to analyze. The latest trend continues a three-year pattern of home ownership requiring historically large portions of wages as U.S. home prices keep reaching new heights.
The report also shows that major expenses on median-priced homes currently consume 34% of the average national wage. That level marks an increase of more than one percentage point both quarterly and annually, pushing the figure even farther above the common 28% lending guideline preferred by lenders.
The downturns in current and historic affordability represent the latest measures of how home ownership remains a financial stretch for average workers around the nation. They come as the national median home price has climbed to $364,750 this quarter and mortgage rates, while declining, remain over 6%. Combined, those forces are helping to keep the ratio of ownership expenses to wages in the unaffordable range.
Fourth-quarter trends also have reversed a slight improvement during the third quarter of this year that had signaled a possible step in the right direction for homeowners. The portion of average wages nationwide required for typical mortgage payments, property taxes and insurance now stands almost 13 points beyond a low point reached early in 2021, right before home-mortgage interest rates shot up from the lowest levels in decades.
“The U.S. housing market continues to generate great profits for most home sellers but also more and more financial stress for would-be buyers. Average workers now must shell out a larger portion of their wages for major home-ownership expenses than at any time since right before the housing market tanked in the late 2000s,” said Rob Barber, CEO for ATTOM. “Despite recent declines in mortgage rates, down payments on typical home purchases have reached four times the average national wage.”
He added that “at some point, something’s got to give, or a growing number of buyers will have no choice but to toss in the towel and wait for home ownership to become more affordable. But we clearly are not there yet.”
The latest numbers reflect yet another period when year-over-year changes in major expenses on typical single-family homes and condos have outrun changes in average wages around the country. Expense totals have either grown faster or declined less than wages during 14 of the last 15 quarters dating back to late 2020, pushing affordability in the wrong direction for house hunters.
Compared to historical levels, median home ownership costs in 556 of the 566 counties analyzed in the fourth quarter of 2024 are less affordable than in the past. That is virtually unchanged from both the third quarter of 2024 and the fourth quarter of 2023.
NATIONAL MEDIAN HOME PRICE UP QUARTERLY AND ANNUALLY
The national median price for single-family homes and condos has risen to a record high of $364,750 in the fourth quarter of 2024. The latest figure represents a 2.1% increase over the third quarter of this year and is 11.4% above the typical price in the fourth quarter of 2023.
At the county level, the pattern is more varied. Median home prices have increased since the fourth quarter of last year in 503, or 88.9%, of the 566 counties included in the report. Quarterly, however, typical values have risen in only 210, or 37.1% of those markets. That is a sign that the latest jump in national median price may be driven more by larger numbers of sales in markets with bigger increases.
EXPENSES CONSUMING LARGER PORTION OF WAGES
Despite falling mortgage rates in recent months, the portion of average local wages consumed by major expenses on median-priced single-family homes and condos has risen quarterly in 357, or 63.1%, of the 566 counties analyzed, although it is still down annually in slightly more than half.
Nationwide, the typical $2,092 cost of mortgage payments, homeowner insurance, mortgage insurance and property taxes is up 4.6% quarterly and 6.1% annually to a new all-time high. That has outpaced the 1% quarterly and 3.1 annual gains in the average national wage.
The latest expense total commonly consumes 34 percent of the average annual national wage of $73,918. That is up from 32.5% in the third quarter of 2024 and from 32.7% in the fourth quarter of last year. The current level is nearly 13 percentage points more than a recent low point of 21.3% hit in the first quarter of 2021.
The cost-to-wage ratio exceeds the 28% lending guideline in 436, or 77%, of the counties analyzed, assuming a 20% down payment. That percentage is unchanged from the third quarter of 2024, based on the same group of counties, but is up slightly from 75.4% a year ago. It is far above the 31% figure recorded in early 2021.
In about one-third the markets analyzed around the U.S., major expenses consume at least 43% of average local wages, a benchmark considered seriously unaffordable.
HOME OWNERSHIP STILL UNAFFORDABLE BY HISTORICAL STANDARDS
Home ownership is less affordable in the fourth quarter of 2024 compared to historic averages in 98.2% of the 566 counties analyzed. That is about the same as the level in both the third quarter of 2024 and the fourth quarter of last year, but more than 20 times higher than the 4.6% portion in the first quarter of 2021.
Historical indexes have worsened quarterly, mostly by small amounts, in about two-thirds of the counties reviewed. That had dropped the nationwide index to its lowest point since 2007.
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 (Detroit), MI (index of 61)
» Fulton County (Atlanta), GA (65)
» Mecklenburg County (Charlotte), NC (65)
» Broward County (Fort Lauderdale), FL (65)
» Hillsborough County (Tampa), FL (66)
Overall, counties with the worst affordability indexes in the fourth quarter of 2024 are:
» Jasper County (Carthage), MO (index of 54)
» Jackson County, MS (56)
» Beaver County, PA (outside Pittsburgh) (56)
» Navajo County, AZ (Holbrook), AZ (57)
» Muskegon County, MI (57)
The nationwide index of 74 is worse than in the third quarter of this year (78) and the fourth quarter of last year (77).
