Mortgage Rates Climb, Affecting Home Affordability Across U.S. Counties

Challenges of Home Affordability in the U.S.

The real estate market is facing a significant crisis, as revealed in the latest U.S. Home Affordability Report by ATTOM. An alarming 98% of counties in the United States have shown a deterioration in home affordability during the third quarter of 2026 compared to historical averages. This trend, fueled by continuous increases in mortgage rates, has left a vast majority of prospective homeowners grappling with the realities of a strained housing market.

Rising Mortgage Rates and Their Impact

In the third quarter of 2026, the national median sales price for homes stood at $368,000, reflecting a modest decline of 1% from the previous quarter and 2% from the same period the previous year. However, the relief brought by these price reductions is overshadowed by escalating mortgage rates. As of the end of September 2026, the average 30-year fixed mortgage rate reached 7.3%, with the 15-year rate at 6.6%, approaching the peak levels last recorded in 2023.

Rob Barber, CEO of ATTOM, noted, "Affordability remained a challenge in the third quarter, even as some of the underlying factors moved in a favorable direction." He emphasized that while home prices have declined on a national scale, and wage growth outpaced price growth in various regions, these positive shifts were insufficient to significantly bolster overall affordability.

The Burden of Home Ownership Costs

For average wage earners, the report indicated that the income required to cover major monthly expenses related to home ownership—such as mortgage payments, property taxes, insurance, and mortgage insurance—has become increasingly unattainable. Specifically, 80.1% of the analyzed counties showed that the combined costs of these expenses exceeded the typical resident's wages. This situation is particularly dire in densely populated counties, where the ownership costs frequently consumed an overwhelming portion of income. For example, in Los Angeles County, California, homeowners were spending approximately 69.9% of their wages just to maintain ownership costs.

Regional Insights

Interestingly, despite the broader decline in home affordability, Texas counties have showcased remarkable increases in median home prices. For instance, in Travis County, the median price surged by a staggering 105% year-over-year. Such developments highlight a complex landscape of housing dynamics across the United States, with some areas experiencing sharp price rises while others see declines.

Contrastingly, many populations in areas like Cook County, Illinois, and San Diego County, California, are feeling the pinch more than populations in regions like Harris County, Texas, where ownership expenses consume just over 20% of typical wages, making homeownership notably more feasible.

A Growing Chasm

The disparity in wage growth versus home prices is growing, with reports indicating that in 58.9% of counties, wages have increased at a rate surpassing home price inflation. However, in populous regions such as Cook County and Harris County, home prices have outpaced wage growth, leading to tougher conditions for new buyers.

From an investment perspective, it is critical to consider these broader economic challenges when making decisions related to real estate. The high monthly ownership expenses associated with median-priced homes pose a significant barrier, leading to a situation where individuals are spending over 31.8% of their typical wages on housing. Alarmingly, in 30.9% of counties, the share exceeds 43%—marking them as areas facing serious affordability crises.

Conclusion

The ATTOM U.S. Home Affordability Report paints a stark picture: while there are indications of some nominal improvements in home prices and wage growth, the situation remains critical for average American families striving for homeownership. Among the challenges ahead is the balance of wages and rising costs, which continue to hinder access to affordable housing in many markets. The hope lies in effective policy interventions coupled with concerted efforts from both the public and private sectors to alleviate the persistent issues plaguing the housing market.