All real estate is local, which makes discerning the health of local housing markets — and the extent to which a lack of housing affordability could induce market declines — a nuanced endeavor.
Nationally, the post-pandemic U.S. housing market has been hamstrung by high home prices, mortgage rates double those of 2021 and 2022, and rising costs associated with ongoing homeownership, like insurance premiums and property taxes.
Meanwhile, persistent mortgage rate lock-in effects have prevented existing homeowners from trading in mortgages with notes 200 to 400 basis points lower than market rates today. The average contract interest rate on all outstanding mortgages stood at 4.3% as of the first quarter of 2025, per the Federal Housing Finance Agency’s National Mortgage Database.
Even with available housing inventory hitting a five-year high in June, a median sales price of $410,800 in the second quarter of 2025 has continued to sideline many prospective homebuyers. Adding insult to injury for mortgage lenders and originators, home purchase contract cancellations soared in July as mortgage and housing costs outpaced wage growth, with roughly 15% of home purchase agreements terminated in July.
Offering a nuanced account of affordability in local housing markets, a report published Thursday by Attom, a real estate market analytics firm, spotlighted where such housing-related pressures, layered with foreclosure, unemployment, home equity and wage-related data, make county-level housing markets vulnerable to decline.
“This summer’s home prices were certainly eye-catching, but there are many factors that contribute to the health of a local housing market,” commented Rob Barber, CEO of Attom, in a press release announcing the findings. “That can be scary for owners and prospective buyers who don’t always get a full view of their market.”
Nationwide in the second quarter, the combined cost of a downpayment, monthly mortgage payment and other homeownership expenses consumed 33.7% of a typical homeowner’s annualized wages. In some U.S. counties, that combined cost “even exceeded what a typical worker could cover with a full year’s pay,” according to Attom.
To compile its report, Attom examined 579 counties with sufficient data to analyze. There are more than 3,000 counties and county-equivalents in the U.S.
In Marin County, Calif., for example, overall home expenses consumed 119.7% of a typical resident’s annualized wages. In Santa Cruz County, Calif., the combined expenses cost 116.1% of typical annual wages. In Kings County, N.Y., which contains Brooklyn, home expenses consumed 109% of typical annual wages.
“In a sign that high home costs are affecting all kinds of housing markets, in the second quarter of 2025 buying and maintaining a home would have cost more than a third of the typical resident’s annualized wages in 34 out of the 50 least risky markets and 40 out of the 50 riskiest markets,” the report stated.
With high home prices presenting a nationwide challenge, Attom concluded that unemployment and foreclosure rates more directly contribute to risk at the county level. Of the 50 county-level housing markets considered at highest risk of decline, California contained 14, Florida had seven, New Jersey claimed five and Louisiana claimed four.
“There’s uncertainty about how long prices can keep going up, and what will happen with the broader economy,” Barber added.
Nationally, 2.7% of homes were seriously underwater at the end of the first quarter of 2025, meaning the combined estimated balance of loans secured by the properties were at least 25% more than the properties’ estimated market values.
Of the 579 counties Attom analyzed, 39% (223) had rates of seriously underwater homes exceeding the national average. Louisiana contained seven of the 10 counties with the highest rates of seriously underwater mortgages, with the top five all located in the Pelican State: Rapides Parish (17.3%), Calcasieu Parish (16.9%), Caddo Parish (14.3%), Tangipahoa Parish (14.1%) and East Baton Rouge Parish (12.1%).
Meanwhile, roughly 35% (204) of the counties Attom analyzed had June unemployment rates higher than the national rate of 4.4%. Counties with the highest unemployment rates were led by Imperial County, Calif., at 19%, and Yuma County, Ariz., at 15.2%. They were followed by the California counties of Tulare (10.8%), Merced (10.5%) and Kings (9.8%).
Overall, the Attom report concluded that counties in the South and West commanded the list of most vulnerable local housing markets, with California and Florida prominent among the riskiest areas. Several counties in the Northeast and Midwest showed relative stability.
