Unmet demand for housing continues to drive home prices higher, as median sales prices on homes in the U.S. have risen for the 10th straight year. These increases are putting pressure on affordability, which continues to trend downward (see chart, below), according to the ATTOM U.S. Home Affordability Report. In the first quarter of 2015, homebuyers on average needed just 18.4% of their wages to buy a median-priced home, but that share rose to 25.2% in the fourth quarter 2021, continuing an upward trajectory that inches closer and closer to the “unaffordable” designation at 28%—which is often the tipping point for when lenders become reluctant to issue a mortgage loan.

Without an increase in the supply of homes and condominiums for sale, this percentage may continue to grow, especially as the pandemic has many potential buyers seeking a safe place to stay and space to work from home. Historically low interest rates on mortgages, combined with rising wages, have helped keep homebuying in the affordable range (less than 28% of wages, on average) ... for now.
A key metric to keep an eye on is wage growth versus home-price appreciation (see chart, below). In Q3 2021, home prices were growing faster than wages in 78% of the counties surveyed. If that trend continues, affordability will be a serious concern for much of the country.

RELATED
- ‘Worst Ever’ Market for First-Time Buyers, Experts Say
- Consumer Price Index Points to Elevated Inflation and Higher Interest Rates in 2022
- Solutions to Housing Affordability
Of course, location is a critical factor in affordability. Buying a home in Kings County (home to Brooklyn), N.Y., requires 76.5% of wages for the average worker, but buying a home in Schuylkill County (outside of Allentown), Pa., requires just 6.5%. As remote work makes some segments of the workforce more mobile, demand may increase in locations where homebuying is a more affordable endeavor.


Methodology and Respondent Information: The ATTOM U.S. Home Affordability Index analyzes median home prices and average wage data in 575 U.S. counties with a combined population of 252.6 million. The affordability index is based on the percentage of average wages needed to pay for major expenses on a median-priced home with a 30-year fixed-rate mortgage with a 20% down payment and a 28% maximum “front-end” debt-to-income ratio. “Major expenses” include property taxes, home insurance, mortgage payments, and mortgage insurance.
Related Stories
Housing Giants
What Now for Residential Construction? The Housing Industry Post-Pandemic
The COVID-19 pandemic is essentially over, but the disruption to the housing industry that lies in its wake will be felt for years to come
Housing Giants
Builder Rankings by Revenue: 2022 Housing Giants List
Pro Builder's annual Housing Giants rankings list provides a snapshot in time of builders’ perceived opportunities and challenges. These are the top 239 home builders in the nation, ranked by revenue
Housing Giants
2022 Housing Giants Report—Top 40 First Move-Up Home Builders
These 40 builders lead the nation in first move-up home construction in Pro Builder’s 2022 Housing Giants