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Home Affordability Struggles: Analyzing Q4 2025 Trends

As we step into 2026, the U.S. housing market continues to present challenges for prospective homeowners. Despite some signs of improvement, the ATTOM U.S. Home Affordability Report reveals that home affordability remains a pressing concern nationwide. For the fourth quarter of 2025, a staggering 99% of analyzed counties reflected that median-priced homes were less affordable compared to historical norms. This ongoing issue demonstrates the stark reality for many American families.

Major Findings from the ATTOM Report

The report, released by ATTOM, a leader in property data and real estate analytics, analyzed 594 counties nationwide. The findings indicate a slight uptick in affordability, with 86% of these counties experiencing better home affordability in the fourth quarter compared to the third quarter of 2025. Despite this, the overall trend of homes remaining out of reach for the average American persists.

The national median home price, which has hovered around $365,000, marks a historical high that compounds affordability woes. After a five-year ascent, home prices surged by an alarming 54%, while wages only increased by 29% during the same period, according to U.S. Bureau of Labor Statistics data. This imbalance has left many potential buyers in a tough spot, with home buying power heavily reliant on both housing prices stabilizing or declining, and lending rates.

The Financial Reality

Martin Barber, CEO of ATTOM, noted that in 2025, many Americans found themselves priced out of the housing market. The required income to maintain home ownership was notably high, with expenses eating into the average resident's earnings. In fact, for a typical mortgage payment, homeowners spent about 31.4% of their earnings on costs related to homeownership, such as mortgage payments and insurance. In 74.1% of the counties studied, these expenses accounted for more than 28% of a typical resident's wages, indicating unaffordable conditions.

Among these counties, well-populated areas like Los Angeles, San Diego, and Orange County are clear leaders in homeownership challenges. Los Angeles County, for example, absorbed 67.5% of a typical wage on home-related expenses.

The Drop in Mortgage Rates

One encouraging sign in Q4 was the decline in average mortgage rates, dropping from 6.34% early in October to 6.15% by year's end. This reduction potentially provided some respite for homebuyers struggling with affordability. Nevertheless, even with falling rates, many potential homeowners are still grappling to find financial footing.

In Cook County, IL, for example, average home expenses consumed only 26.4% of typical wages, offering a sharp contrast to areas like Miami-Dade County at 43.6%. Such disparities accentuate the dynamic nature of the real estate market across different regions.

County-Wise Performance

Interestingly, the report highlighted that home price growth outpaced wage growth in 43.3% of the counties analyzed. Areas such as Kings County and Queens County in New York experienced this phenomenon. Conversely, in Los Angeles and Cook Counties, wage growth exceeded home price increases, providing a glimmer of hope for buyers in these markets. On the flip side, nearly 30% of counties surveyed showed that home purchase expenses exceeded 43% of a typical county resident's wages, making them severely unaffordable.

A Look Ahead

As we look forward to 2026, the U.S. housing market remains at a critical juncture. With home prices still high, and many potential buyers caught in a bind due to insufficient wages, the road to homeownership remains fraught with challenges. Advocacy and strategic policy measures addressing these issues will be essential to ensure that affordable housing becomes a reality for more Americans.

Conclusion: ATTOM's fourth-quarter report depicts a complicated picture for home affordability, with national median prices stuck at record highs. Although a majority of counties saw improvements in affordability compared to the previous quarter, the persistent challenges highlight the need for a comprehensive approach to tackle the affordability crisis in the housing sector.

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This report signifies critical insight into the evolving landscape of home affordability, an area that requires our continuous attention and action to make homeownership an attainable goal for all Americans.