Against the backdrop of a rebalancing market and economic uncertainty, the persisting housing affordability crisis worsened in the spring, according to ATTOM Data Solutions’ latest U.S. Home Affordability Report.
The organization’s second quarter report found that the average price for a single-family home was less affordable in 98% of counties nationwide during Q2. This tracks with a trend that took hold early last year when a spike in mortgage rates started raising ownership costs.
According to the report, Q2’s reading also marks the highest level of housing unaffordability since 2007.
Analyzing more than 550 counties nationwide, the report shows that a renewed surge in home prices exacerbated affordability challenges for buyers. The increase in price tags pushed the typical portion of average wages required for major homeownership expenses up to 33%, which exceeds the 28% debt-to-income ratio often considered unaffordable by common lending standards.
Key highlights
- Historical home affordability is at its worst point in 16 years.
- The median single-family home value has risen 10% from the first to the second quarter of 2023, to $350,000.
- Despite the recent quarterly home-price rebound, wages are still growing faster than prices annually in three quarters of markets.
- The portion of wages needed for homeownership increased from 29.9% in Q1 2023 to 33.4% in Q2.
- Annual wages of more than $75,000 are needed to pay for significant costs on the median-priced home purchased during Q2 2023 in more than half of U.S. markets.
Major takeaway
“The U.S. housing market has done an about-face following a downturn that threatened to usher in an extended period of flat or falling prices. With that has come another blow to how much house the average worker around the country can afford,” said Rob Barber, CEO of ATTOM. “Whether this is just a temporary blip amid this year’s peak buying season or a sign of another extended price surge is anyone’s guess. But any predictions of a market demise were certainly premature—and house hunters are feeling the pinch.”
“The worsening picture facing homebuyers reflects the second shift in the U.S. housing market in the past year, coming as the median single-family home price has shot up to a new record following three quarters of declines,” an excerpt from the report reads. “Those declines strongly suggested an end to a decade-long boom period lasting from 2012 into the middle of 2022.
“This spring’s price increases have helped to push the typical cost of major ownership expenses up far faster than wages, resulting in declining home affordability,” the report adds. “The ongoing drop-off in affordability comes as multiple forces create an uncertain scenario that could push the U.S. housing market in decidedly different directions.”
