Home prices grew the most since 2015, potentially🐻 pushing more buyers out of the already expensive market in the second quarter.

The national median home price rose 10.2% to $350,000 in the second quarter from the first, according to the Home Affordability Report released by ATTOM, a real estate data firm. The jump comes after three consecutive quarters where prices stayed the same or dropped slightly. The median is up 2.5% from the second quarter of 2022 when i💟t hit $314,500.

Home affordability worsened nationwide in the second quarter of 2023. In 98% of counties with enough data to analyze, single-family homes and condos were less affordable in the second quarter of 2023 than historical averages, continuing a trend that began in early 2022.

Ownership Out of Reach for the Average Consumer

From the first to the second quarter of 2023, the median single-family home value rose 10% to $350,000—one of the largest quarterly increases in the past decade. As of the second quarter, the median prices are 2% higher than a year earlier when the market peaked before stalling and prices falling.

The recent jump in housing prices has resulted in an average of 33% of wages going toward home ownership. This is considerably higher than the 28% debt-to-income ratio most lenders recommend for a ♈single debt. Most lenders prefer that all debt combined be no more than 36%, making today’s home prices out of reach for the average buyer.

Potential Buyers Feeling the Pinch

U.S. housing prices have turned around after a long period of flat or declining prices. Consequently, the average worker now faces another hurdle in terms of how much house they can afford, in addition to rising borrowingꦛ costs. 

"Whether this is just a temporary blip amid this year's peak buying season or a sign of another extended price surge is anyone's guess. But any predictions of a market demise were certainly premature—and house hunters are feeling the pinch," said Rob Barber, CEO of ATTOM.

In 427 of the 574 counties analyzed in the report, wage growth still outpaced ho𝓀me prices in the second quarter of t💃he same period last year, by 74%, This was the opposite trend from the second quarter of 2022, when prices were growing faster than wages in 91% of those counties. A typical home at the current price in half the markets surveyed requires wages exceeding $75,000 per year.

Only 2🗹% of Markets M✨ore Affordable Than Historic Averages

A mere 2% of markets are more affordable than historical averages in the second quarter o💮f 2023. That is slightly less than a year ago, when the figure was 4%, and far below the 60% level in the second quarter of 2021.

Affordability data was derived from publicly recorded sales deeds and average wage data from the U.S. Bureau of Labor Statistics in 574 counties with a combined population of 255.5 million during the second quarter of 2023. Using a 30-year fixed-rate mortgage and a 20% down payment, the affordability index calculates the percentage of average wages needed to cover major expenses on a median-priced home. Those expenses include property taxes, home insurance, and mortgage payments.