The typical American cannot afford to buy a home in a growing number of communities across the nation, according to common lending standards.
That’s the main takeaway from a new report from real estate data provider ATTOM. Researchers examined the median home prices last year for roughly 575 U.S. counties and found that home prices in 99% of those areas are beyond the reach of the average income earner, who makes $71,214 a year, according to ATTOM..
Housing experts point to couple trends driving up housing costs. Mortgage rates have topped 7%, adding hundreds of dollars per month to a potential house payment.
At the same time, homeowners who locked in at lower mortgage rates during the pandemic have opted not to sell out of fear of having to buy another property at today’s elevated rates, depleting the supply of homes for sale.
“The only people who are selling right now are people who really need to move because of a life event — divorce, marriage, new baby, new job, etc.,” Daryl Fairweather, chief economist of Redfin, told CBS MoneyWatch. “That lack of new inventory is keeping prices high.”
As of August, the national median existing-home price was $407,100, up 3.9% from a year ago, according to the National Association of Realtors. The average interest rate on a 30-year home loan was 7.19%, up from 6.48% at the beginning of 2023, according to Freddie Mac. Prices will remain unaffordable as long as mortgage rates continue to rise, Fairweather said.
“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,” ATTOM CEO Rob Barber said in a statement Thursday. “We will see how this shakes out as the peak 2023 buying season winds down.”
ATTOM’s data adds to a growing body of real estate research in recent years that highlights the lack of affordable housing . It’s an especially tall task for younger millennial shoppers, one expert said.
“First-time home buyers, who are often the most sensitive to interest rates, have had to postpone their home-buying dreams,” said Dan Hnatkovskyy, co-founder of new home construction startup NewHomesMate, told CBS MoneyWatch. “Those older buyers with more cash on hand can buy down interest rates, or they can absorb a higher monthly payment and are still buying homes across the country.”
