The third quarter proved to be a record setting period for the U.S. residential real estate market—but not in the buyer’s favor. According to new data out from ATTOM, affordability has worsened across the nation amid home price increases and rising mortgage rates, pushing the typical portion of average wages required for major home-ownership expenses up to 35 percent.
This marks the highest level since 2007 and stands well above the 21 percent figure from early 2021, right before home-mortgage rates began shooting up from historic lows.
“The dynamics influencing the U.S. housing market appear to continuously work against everyday Americans, potentially to the point where they could start to have a significant impact on home prices,” said Rob Barber, CEO for ATTOM. “We clearly aren’t there yet, as the market keeps going up and the slowdown we saw last year looks more and more like a temporary lull. But with basic homeownership now soaking up more than a third of average pay, the stage is set for some potential buyers to be priced out, which would reduce demand and the upward pressure on prices. We will see how this shakes out as the peak 2023 buying season winds down.”
The nationwide median price of single-family homes and condos is up 2 percent from the second quarter, to a new record of $351,250. Compared to historical levels, median home prices in 574 of the 578 counties analyzed in the third quarter of 2023 are less affordable than in the past. That is up from 568 of the same group of counties in the second quarter of 2023 and 552 in the third quarter of 2022.
Counties with the largest populations that are unaffordable in the third quarter are Los Angeles County, Cook County (Chicago), Maricopa County (Phoenix), San Diego County, and Orange County.