Major homeownership expenses — mortgage payments, property taxes and insurance — took up 34% of the national average wage in the fourth quarter, according to the latest U.S. Home Affordability Report from Attom.
That’s up more than one percentage point on both a yearly and quarterly basis, moving farther above the 28% lending guideline that Attom cites as the preference for lenders. The uptick in the share of average wages needed to afford homeownership reversed a modest third-quarter decline that many had hoped was a signal that more favorable conditions for homebuyers were ahead. Now, the portion of average wages nationwide needed for major homeownership expenses is 13 percentage points above the low reached in early 2021.
Median-priced single-family homes and condos remain less affordable in the fourth quarter of 2024 compared to historical averages in 98% of counties nationwide.
Driven by high home prices and elevated interest rates, homeownership costs have now required historically large portions of the country’s average wage for three years running. Per Attom’s figures, the national median home prices has grown to $364,750 in the fourth quarter, while mortgage rates are still above 6% (and, as of Freddie Mac’s latest Primary Mortgage Market Survey on Thursday, have begun to climb again).
“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 homeownership expenses than at any time since right before the housing market tanked in the late 2000s,” said Attom CEO Rob Barber. “Despite recent declines in mortgage rates, down payments on typical home purchases have reached four times the average national wage.”
Major homeownership expenses have now either grown faster or dropped less than wages in 14 of the last 15 quarters, dating back to late 2020.
“At some point,” said Barber, “something’s got to give, or a growing number of buyers will have no choice but to toss in the towel and wait for homeownership to become more affordable. But we clearly are not there yet.”