Housing affordability worsens in Q1, home prices outpace wages
Data shows that major homeownership expenses, including mortgage payments, property taxes and insurance, now consume 32.5% of the average national wage of $74,698.
This marks essentially no quarterly change from Q4 2024 (32.7%), but is 1.1% above Q1 2024 (31.4%) and 5.1% more than Q1 2021 (27.4%).
“Home affordability is in a holding pattern this quarter, financially stressful for average wage earners but not changing much,” said Rob Barber, CEO at ATTOM. “This is not unusual during the winter lull when home prices level out. A recent small decline in mortgage rates surely hasn’t hurt either for fledgling buyers.”
Regional disparities widen
The analysis of 574 counties with populations of 100,000-plus revealed stark geographic divides:
Least affordable markets, coastal concentration:
- Kings County, N.Y. (Brooklyn): 109.5% of wages needed
- Maui County, Hawaii: 101.5%
- San Luis Obispo County, Calif.: 100.1%
- Orange County, Calif.: 97.8%
- Marin County, Calif.: 97.5%
Most affordable markets, Midwest-South dominance:
- St. Lawrence County, N.Y.: 10.3% of wages needed
- Mercer County, Pa.: 10.4%
- Peoria County, Ill.: 11.2%
- Jefferson County, Ala.: 11.3%
- Cambria County, Pa.: 11.5%
While the national median home price dipped 1% quarterly to $351,000, analysts noted it remains 5.2% higher than Q1 2024. Roughly three quarters of counties saw annual price increases, with New York’s Suffolk County leading growth at 11.9%. California’s Alameda County saw steepest decline at -11.2%.
Barber cautioned that seasonal patterns may give way to economic forces.
“With so much economic uncertainty these days connected to investment markets, federal policy shifts and very mixed economic forecasts, it is anyone’s guess how much prices will move,” he said.
Wage growth not keeping pace
The report highlights a growing disconnect between housing costs and earnings.
Home prices rose faster than wages in 47% of counties, with the typical buyer now needing $86,611 annually to afford a home.
This exceeds average wages in 86% of markets analyzed. In high-cost areas like Manhattan, required incomes surpass $386,000, according to ATTOM.
Compared to pre-pandemic levels, 96.5% of counties are less affordable than historic averages. This represents a 22-fold increase from Q1 2021 (4.2%).
The full report can be found here.
