Home price affordability constraints loosen in fourth quarter: Attom

Despite home prices continuing to rise faster than household income, affordability gains inched up due to the low mortgage rate landscape, according to Attom Data Solutions.

Average wage earners could not afford the median priced home in 71% of the 486 counties analyzed In Attom's fourth-quarter Home Affordability Report. That share fell from 75% a year earlier and 73% in the third quarter.

"Home prices rose across the country by 9% year-over-year in the fourth quarter of 2019, and the typical home remained a financial stretch for average wage earners," Todd Teta, chief product officer with Attom Data Solutions, said in a press release.

"However, homes were actually a bit more affordable because of declining mortgage rates combined with rising pay to overcome the continued price run-up. As long as people are earning more money and shelling out less to pay off home loans, the market should remain strong with prices continuing to rise, at least in the near term. Those are big ifs, but for now this report offers some decent findings for both home seekers and home sellers."

Still, home price appreciation outpaced increases in average weekly wages in 369 or 76% of the counties in Attom's study. The largest of those included Los Angeles County, Calif.; Cook County, Ill., which envelops Chicago; and Harris County, Texas, which contains Houston.

On the flip side, wage growth outpaced home price appreciation in 24% of the counties in the study. Among these were Orange County, Calif., Miami-Dade County, Fla., and the New York City boroughs of Brooklyn (Kings County) and Queens.

Overall, 64% of the markets analyzed required at least 30% of annualized weekly wages to buy a home within them in the fourth quarter.

Marin County — north of San Francisco — led all counties by required percentage of annualized weekly wages to buy a home at 111.2%. Brooklyn's Kings County followed at 103.6%, then came Silicon Valley's Santa Cruz County at 103%.

Meanwhile, affordability in 53% of counties exceeded historic fourth-quarter averages, a huge rise from 29% year-over-year and 48% in the third quarter.