Home Affordability Lags, Despite Home Prices Falling

The median-priced single-family home was less affordable than historic averages in 99% of counties in the fourth quarter of 2022, according to ATTOM.

Comparatively, just 68% of counties were considered less affordable a year prior. On average, homeownership costs surpassed the traditional lending standard of 28% of income, reaching 32.3%, up from 23.8% year over year and up from 29.6% in the third quarter of 2022. Despite lowering home prices, higher mortgage rates are continuing to impact homebuyers’ ability to afford a property.

Even with challenging circumstances across the country, there were areas of Pennsylvania that remain quite affordable to the average homebuyer. Schuylkill County remains one of the most affordable in the entire U.S., costing just 12.8% of annualized weekly wages needed to afford homeownership. Cambria County was also noted for its affordability, requiring just 14.1%. For homebuyers looking for a bigger metropolitan area, in Philadelphia County, just 18.2% of wages are needed and in Allegheny County, it’s 20.7%, both well below the national average.

Even though home prices have fallen from historic highs, they are still up 5% or more in 63% of counties year over year. Philadelphia was cited for being one of the most populous areas to have home prices fall, as they dropped 13% from the fourth quarter of 2022. However, home prices are also continuing to increase faster than wage growth. In more than half of counties (56%), home prices are growing faster than weekly wages, but that is down 28% from the third quarter of 2022. For annual wage growth, home prices are outpacing wage growth in 44% of counties. In half of markets, annual wages need to be a minimum of $75,000 to afford homeownership.