Affordability at a Tipping Point?

According to the newest Home Affordability Report covering the fourth quarter of 2023 published by ATTOM Data found that median-priced single-family homes and condominiums remained less affordable during the quarter when compared to historical averages in 99% of counties nationwide. 

The latest data continues a trend dating back to 2021 of home ownership requiring historically larger portions of wages around the country than seen previously. 

The report also shows that major expenses on median-priced homes consume 33.7% of the average national wage in the fourth quarter—a level considered unaffordable by common lending standards which pegs 30% of monthly income as the top of the affordability scale. 

Both measures—historical and current affordability—have stayed virtually the same from the third quarter to the fourth quarter of this year after trending consistently against home buyers for almost three years. That has happened as major ownership expenses and wages both are virtually unchanged this quarter. 

But the two measures of affordability are still worse than they were a year ago and far weaker than in 2021. 

According to ATTOM Data, for example, the portion of average wages nationwide required for typical mortgage payments, property taxes, and insurance are up three percentage points from a year ago and 12 points from early in 2021, right before home mortgage rates began shooting up from their lowest levels in decades due to emergency measures implemented by the Federal Reserve. The latest expense-to-wage ratio continues to sit above the 28% level preferred by mortgage lenders and marks the highest point since 2007. 

“The good news is that home affordability has stopped getting tougher around the U.S., at least for the moment. The bad news is that owning a home remains more of a financial stretch than it’s been for many years,” said Rob Barber, CEO for ATTOM Data. “The annual Fall slowdown in the housing market clearly has helped stem the tide working against potential purchasers. Whether that’s just a temporary thing tied to seasonal market patterns is something we won’t know until next year, especially given recent signs that interest rates are coming down. But for now, there is some break into the growing financial stress for house hunters.” 

The fourth-quarter trends come at a time of mixed patterns among home prices and home mortgage interest rates. While average 30-year fixed mortgage rates around the U.S. have grown this quarter from 7.1 to 7.4%, the nationwide median home value has slipped almost 3%. 

Those two factors have helped to keep home ownership expenses steady from the third to the fourth quarter, which has helped to keep those costs from becoming even more unaffordable for average workers. Affordability had worsened almost every prior quarter since early 2021 as wage increases were outpaced by rising interest rates and prices that kept going up amid a decade-long market boom. 

Another round of price declines during the annual Winter market contraction combined with interest rate declines that have emerged very recently may help turn the affordability picture back around in favor of buyers. 

Click here to see the research in its entirety. 

Share this post :

Picture of Sasa


Biographical Info
Latest News

Unleash the Power of Knowledge

Stay in the know with our suite of email blasts
Receive the latest news

Gain Access to Exclusive Mortgage Knowledge!

Stay at the forefront of industry developments! By subscribing to MortgagePoint, you’re aligning yourself with the latest insights, updates and exclusive promotions in the mortgage industry. As an industry professional, it’s critical to stay informed and up-to-date. Don’t miss out – subscribe now!