Falling Home Prices Aren’t Helping: Mortgage Rates Keep Affordability Out of Reach

Falling Home Prices Aren’t Helping: Mortgage Rates Keep Affordability Out of Reach

Home prices edged lower in the third quarter, but most Americans still couldn’t catch a break on affordability. Mortgage rates climbed toward levels last seen in 2023, wiping out the modest price relief and keeping ownership costs elevated in nearly every corner of the country.

According to Attom’s third-quarter U.S. Home Affordability Report, ownership costs on a median-priced home exceeded historical averages in 570 of the 583 counties analyzed—98 percent of the markets studied. The national median sales price slipped to $368,000, down 1 percent from the second quarter and 2 percent from a year earlier. At the same time, the 30-year fixed rate reached 7.3 percent and the 15-year rate hit 6.6 percent by quarter’s end.

The Numbers Behind the Squeeze

Attom’s analysis assumes a 20 percent down payment and measures major ownership costs (mortgage principal and interest, property taxes, and insurance) against local wages. Key findings include:

• Income needed vs. typical wages: It takes $90,191 a year to afford the national median-priced home. The national average wage is $79,534.
• Share of income: Ownership costs consumed 31.8 percent of a typical worker’s wages.
• Seriously unaffordable markets: In 180 counties, costs exceeded 43 percent of local wages—Attom’s threshold for “seriously unaffordable.”
• Price vs. wage trends: Median prices rose year over year in 375 counties (64.3 percent of those analyzed). Wages grew faster than home prices in 343 counties (58.9 percent).

“Affordability remained a challenge in the third quarter, even as some of the underlying factors moved in a favorable direction,” Attom CEO Rob Barber said. “Home prices declined nationally and wage growth outpaced price growth in many counties, but those gains were not enough to meaningfully improve affordability across much of the country.”

Coastal Markets Remain the Toughest

California dominated the list of least-affordable large counties, accounting for 12 of the 25 markets where ownership costs took the biggest bite of wages. New York had six, New Jersey three, and Hawaii two.

The extremes:

• Kings County (Brooklyn), New York: Costs consumed 114.1 percent of typical wages—the highest share in the report.
• Santa Cruz County, California: 105.5 percent.
• Marin County, California: 102.4 percent.

Manhattan required the highest income to buy a median-priced home, at $409,992, followed by San Mateo County, California, at $381,550.

Where Affordability Still Exists

A few large counties stayed relatively affordable for typical residents:

• Wayne County, Michigan: 17.9 percent of wages.
• Philadelphia County, Pennsylvania: 20.2 percent.
• Harris County, Texas: 20.7 percent.

The Bottom Line

Even with a modest national price dip and wage growth outpacing price growth in more than half the counties studied, higher mortgage rates kept the door closed for many buyers. Affordability lagged historical norms almost everywhere, and coastal markets continued to post the most extreme gaps between local wages and the cost of homeownership.

The third-quarter data underscore a familiar pattern: small improvements in prices or wages can be quickly offset when borrowing costs rise.