HOME-OWNERSHIP REMAINS FINANCIAL STRETCH AROUND U.S. AS PRICES REMAIN NEAR RECORD HIGH
Major Home-Ownership Expenses Continue to Consume One-Third of National Average Wage;
Portion Holds Steady as Median U.S. Home Price Dips Slightly During Slow Winter Period;
Historical Affordability Also Stays Close to Low Point Over Past Decade
ATTOM, a leading curator of land, property data, and real estate analytics, released its first-quarter 2025 U.S. Home Affordability Report showing that median-priced single-family homes and condos remain less affordable in the first quarter of 2025 compared to historical averages in 97 percent of counties around the nation with enough data to analyze. The latest trend extends a three-year pattern of home ownership requiring historically large portions of wages as U.S. home prices stay at or near record levels.
The report also shows that major expenses on median-priced homes currently consume 32 percent of the average national wage. That level is virtually the same as in the fourth quarter of last year although about one percentage point up from a year ago, keeping the figure above the common 28 percent lending guideline preferred by lenders.
The current and historic affordability levels represent the latest measures of how home ownership remains a financial stretch for average workers around the nation. It comes as the national median home price has dipped slightly this quarter, to $351,000, during the typically slow Winter home-buying season. But with home mortgages rates still near 7 percent, the drop-off is too small to push the ratio of ownership expenses to wages back into the affordable range.
“Home affordability is in a holding pattern this quarter – financially stressful for average wage earners but not changing much. This is not unusual during the Winter lull when home prices level out. A recent small decline in mortgage rates surely hasn’t hurt either for fledgling buyers,”, said Rob Barber, CEO for ATTOM. “If history is a good guide, prices will rise as we head into the peak buying season that’s about to start, which will worsen affordability measures.”
But he added that “with so much economic uncertainty these days connected to investment markets, federal policy shifts and very mixed economic forecasts, it is anyone’s guess how much prices will move.”
The latest numbers represent a modest addition to a four-year pattern of annual changes in major expenses on typical single-family homes and condos outpacing changes in average wages around the country. Expense totals have either grown faster or declined less than wages during 14 of the last 16 quarters dating back to early 2021, pushing affordability in the wrong direction for house hunters.
The report determines affordability for average wage earners by calculating the amount of income needed to meet major monthly home ownership 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 is measured against annualized average weekly wage data from the U.S. Bureau of Labor Statistics.
Compared to historical levels, median home ownership costs in 554 of the 574 counties analyzed in the first quarter of 2025 are less affordable than in the past. That is down slightly from both the fourth and first quarters of 2024. During those time periods, 563 and 562 of the same group of counties were considered historically unaffordable, respectively.
Historic measures remain negative as the portion of average local wages consumed by major home-ownership expenses on typical homes are considered unaffordable during the first quarter of 2025 in about three-quarters of the 574 counties in the report, based on the 28 percent guideline. Counties with the largest populations that are unaffordable in the first quarter are Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego County, CA; Orange County, CA (outside Los Angeles) and Miami-Dade County, FL.
On the flip side, the most populous of the counties with affordable levels of major expenses on median-priced homes during the first quarter of 2025 are Cook County (Chicago), IL; Harris County (Houston), TX; Wayne County (Detroit), MI; Philadelphia County, PA, and Cuyahoga County (Cleveland), OH.
View Q1 2025 U.S. Home Affordability Heat Map
National median home prices dip quarterly but remain up annually
The national median price for single-family homes and condos has declined this quarter by roughly 1 percent from record-high levels of about $355,000 during the second through the fourth quarters of 2024. Small price dips are common during traditionally slower first-quarter time periods for the U.S. housing market. However, the latest figure still represents a 5.2 percent increase over the first quarter of last year and is 10.1 percent above the typical price in the first quarter of 2023.
At the county level, similar patterns have held over the past year. Median home prices have increased since the first quarter of last year in 416, or 72.5 percent, of the 574 counties reviewed. Quarterly, however, typical values decreased in 417, or 72.6 percent, of those markets.
Data was analyzed for counties with a population of at least 100,000 and at least 50 single-family home and condo sales in the first quarter of 2025.
Among the 48 counties in the report with a population of at least 1 million, the biggest year-over-year increases in median prices during the first quarter of 2025 are in Suffolk County (Long Island), NY (up 11.9 percent annually); Nassau County (Long Island), NY (up 9.4 percent); Cuyahoga County (Cleveland), OH (up 9.4 percent); Wayne County (Detroit), MI (up 8.9 percent) and Honolulu County, HI (up 7.6 percent).
Counties with a population of at least 1 million where median prices remain down most from the first quarter of 2024 to the same period this year are Alameda County (Oakland), CA (down 11.2 percent); Fulton County (Atlanta), GA (down 4.2 percent); Duval County (Jacksonville), FL (down 2.9 percent); Harris County (Houston), TX (down 1.9 percent) and King County (Seattle), WA (down 1.9 percent).
Prices improving more than wages in about half of U.S.
As home values keep rising throughout most of the U.S., year-over-year price changes have surpassed changes in weekly annualized wages during the first quarter of 2025 in 269, or 46.9 percent, of the counties analyzed in the report. The opposite is true in 53.1 percent of those counties. That roughly 50-50 split has helped keep home affordability at roughly the same levels over the past year.
The latest group of counties where prices have increased more annually than wages, or declined less, include Los Angeles County, CA; Cook County, (Chicago), IL; Maricopa County (Phoenix), AZ; Orange County, CA (outside Los Angeles) and Queens County, NY.
The latest group where wage increases have beaten out shifts in median prices include Harris County, (Houston), TX; San Diego County, CA; Miami-Dade County, FL; Kings County (Brooklyn), NY, and Dallas County, TX.
Home ownership expenses as portion of wages down quarterly while still up annually, remaining at unaffordable levels
The portion of average wages consumed by major expenses on median-priced single-family homes and condos has declined quarterly in 407, or 70.9 percent, of the 574 counties analyzed. This has happened amid a period in which typical home values have held steady nationwide and average 30-year, fixed mortgage rates have dipped back below 7 percent, pushing ownership costs downward. However, the expense-to-wage ratio is still up annually in 60 percent of those markets.
Nationwide, the typical $2,021 cost of mortgage payments, homeowner insurance, mortgage insurance and property taxes is down 0.7 percent quarterly while the average national wage has grown 1.1 percent. Annually, though, typical costs are up 5.6 percent compared to just a 4.2 percent increase in the average national wage.
The latest expense total commonly consumes 32.5 percent of the average annual national wage of $74,698. That is about the same as the 32.7 percent portion during the fourth quarter of 2024 but still up from 31.4 percent in the first quarter of last year.
The cost-to-wage ratio exceeds the 28 percent lending guideline in 413, or 72 percent, of the counties analyzed, assuming a 20 percent down payment. That percentage is down from 75.4 percent the fourth quarter of 2024, based on the same group of counties, and from 70.9 percent a year ago. But it remains far above the 31.2 percent figure recorded in early 2021.
In about one-third the markets analyzed around the U.S., major expenses consume at least 43 percent of average local wages, a benchmark considered seriously unaffordable.
Affordability downturns over the past year, while small, have spread consistently across all price segments of the U.S. housing market, with somewhat higher concentrations in the Northeast and Midwest. The Midwest consistently has been the most affordable for local wage earners, so the latest trends continue to point to that region headed toward the same difficult territory as higher-priced areas.
Financial burden for home buyers remains heaviest along Northeast and West coasts
All but four of the top 25 counties where major ownership costs require the largest percentage of average local wages in the first quarter of 2025 are on the Northeast or West coasts. This has extended past trends. The leaders are Kings County (Brooklyn), NY (109.5 percent of annualized local wages needed to buy a single-family home); Maui County, HI (101.5 percent); San Luis Obispo County, CA (100.1 percent); Orange County, CA (outside Los Angeles) (97.8 percent) and Marin County, CA (outside San Francisco) (97.5 percent).
Aside from Kings and Orange counties, those with a population of at least 1 million where major ownership expenses typically consume more than 28 percent of average local wages in the first quarter of 2025 include Queens County, NY (80.3 percent required); Los Angeles County, CA (72.7 percent) and San Diego County, CA (72.2 percent).
Counties where the smallest portion of average local wages are required to afford the median-priced home during the first quarter of this year are St. Lawrence County (Canton), NY (10.3 percent of annualized weekly wages needed to buy a home); Mercer County, PA (10.4 percent); Peoria County, IL (11.2 percent); Jefferson County (Birmingham), AL (11.3 percent) and Cambria County, PA (east of Pittsburgh) (11.5 percent).
Counties with a population of at least 1 million where major ownership expenses typically consume less than 28 percent of average local wages in the first quarter of 2025 include Wayne County (Detroit), MI (14.7 percent); Allegheny County (Pittsburgh), PA (18.7 percent); Philadelphia County, PA (18.9 percent); Cuyahoga County (Cleveland), OH (19.4 percent) and Harris County (Houston), TX (23.5 percent).
Wage needed to afford typical home 16 percent above U.S. average
Major home ownership expenses on typical homes sold in the first quarter of 2025 require an annual income of $86,611 to be affordable. That is 15.9 percent more than the latest average national wage of $74,698.
Annual wages of more than $75,000 are needed to pay for major costs on median-priced homes purchased during the first quarter of 2025 in 305, or 53.1 percent, of the 574 markets in the report. That continues to pose major obstacles as average wages exceed that amount in just 14.1 percent of the counties reviewed.
The 20 counties with the highest annual wages required to afford typical homes remain along the east or west coasts, led by New York County (Manhattan), NY ($386,282); Santa Clara County (San Jose), CA ($367,910); San Mateo County, CA ($364,443); Marin County, CA (outside San Francisco) ($324,035) and San Francisco County, CA ($315,207).
The lowest annual wages required to afford a median-priced home in the first quarter of 2025 are in Mercer County, PA ($20,028); Cambria County, PA (east of Pittsburgh) ($20,279); St. Lawrence County (Canton), NY ($22,503); Schuylkill County, PA (outside Allentown) ($23,145) and Jefferson County (Birmingham), AL ($28,578).
Home ownership still historically unaffordable across most of U.S.
Home ownership is less affordable in the first quarter of 2025 compared to historic averages in 96.5 percent of the counties analyzed. That is slightly better than the levels in both the fourth quarter of 2024 and the first quarter of last year, but more than 20 times higher than the 4.2 percent portion in the first quarter of 2021.
Historical indexes have improved quarterly, mostly by small amounts, in almost three-quarters of the counties reviewed, even as the nationwide index remains at one of its lowest points over the past decade.
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 Broward County (Fort Lauderdale), FL (index of 66); Mecklenburg County (Charlotte), NC (67); Orange County, CA (outside Los Angeles) (68); Hillsborough County (Tampa), FL (68) and Maricopa County (Phoenix), AZ (69).
Overall, counties with the worst affordability indexes in the first quarter of 2025 are Bastrop County, TX (outside Austin) (index of 34); Benton County (Kennewick), WA (54); St. Lucie County (Port St. Lucie), FL (58); Jackson County, MS (59) and Berrien County (St. Joseph), MI (59).
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