Median home affordability an issue in nearly 70% of markets

As affordability lacks around the country, improving wages and shifting balance toward buyers could turn the tide, according to Attom Data Solutions.

The data provider's first-quarter Home Affordability Report showed median home prices in 71% of counties weren't affordable to consumers with average income. It represents a 3 percentage point drop year-over-year. About 49% of the housing markets posted lower affordability compared to their historical averages, up from 42% a year ago.

"We are seeing a housing market in flux across the United States, with a mix of tailwinds and headwinds that are pricing many people out of the housing market, but also are creating potentially better conditions for buyers," Todd Teta, chief product officer at Attom Data Solutions, said in a press release. "Continually rising home prices in many areas do remain a financial stretch — or simply unaffordable — for a majority of households."

New-home sales fell last year with affordability issues as the main culprit. However, that stands to change as homebuilders add more inexpensive starter homes in 2019 and wage growth beat home price appreciation in 51% of markets.

"However, quarterly wage gains have been outpacing prices increases for more than a year and mortgage rates are falling, which have helped make homes a bit more affordable now, than they've been in a year," said Teta. "Affordability may improve because of the simple fact that homes are out of reach for so many home seekers, suggesting that prices need to moderate up in order to attract buyers. Of course, a few quarters do not make a long-term trend. The economy could slow. The impact of last year's tax cuts could fade, and interest rates could go back up, but the signs point to the possibility of an impending buyers' market."

Attom compiled average wage and median home price data from 473 counties. It based its report on the percentage of average wages needed to make monthly payments on a median-priced home with a 30-year fixed-rate mortgage and a 3% down payment.

The highest shares of income needed to buy a median priced home came from New York City in 2019's opening quarter. An average wage earner would need 115.9% of their income in Kings County (Brooklyn) and 115% in New York County (Manhattan).

The lowest shares were Bibb County, Ga., with 11.1%, Baltimore City, Md., at 12.4%, and Wayne County, Mich., at 13.2%.