The Illusion of Relief: Home Affordability Crisis Deepens for Americans

IRVINE, CA – January 08, 2026 – By Kathleen Cook

A glimmer of positive news in the U.S. housing market at the close of 2025 has done little to mask a stark reality: the dream of homeownership remains historically out of reach for the vast majority of Americans. A new report from property data analytics firm ATTOM reveals that while affordability saw a modest improvement in most counties compared to the previous quarter, homes in a staggering 99 percent of the nation were less affordable than their long-term historical averages.

The data paints a picture of a nation grappling with a structural housing crisis. The national median home price held steady near its record high at $365,185 in the fourth quarter of 2025. Though a slight dip in mortgage rates offered some buyers a marginal boost, the fundamental chasm between income and housing costs continues to widen, raising profound questions about economic stability and the future of household wealth in America.

A Widening Chasm Between Wages and Home Prices

The core of the affordability crisis lies in a multi-year trend where home price appreciation has dramatically outstripped wage growth. According to ATTOM's analysis, the median home sales price has surged 54 percent over the past five years. During that same period, typical American wages have risen just 29 percent, based on data from the U.S. Bureau of Labor Statistics. This disparity means that for every dollar a worker has gained in pay, the cost of a median-priced home has gone up by nearly two.

This long-term trend dwarfs the minor quarterly improvements. While 86 percent of the 594 counties analyzed saw affordability improve from the third to the fourth quarter of 2025, this relief is relative. It's a slight easing from a period of extreme strain, not a return to normalcy. In nearly three-quarters of the counties, the major expenses of owning a median-priced home—including mortgage payments, property taxes, and insurance—still consumed more than the 28 percent of average local wages recommended by standard lending guidelines.

"Many Americans were priced out of buying a home in 2025, and affordability remains worse than historic norms in most markets," said Rob Barber, CEO of ATTOM. "Still, modest, quarter-over-quarter affordability improvements in many markets at the end of the year offered some encouragement. Over the past five years, home price growth has nearly doubled wage growth, meaning home buying power in 2026 will depend not only on whether prices level off or decline, but also on mortgage rates and broader economic conditions."

The Regional Roulette of Affordability

The national figures mask deep geographical divides, creating a game of regional roulette for aspiring homeowners. The affordability crisis is most acute in coastal states, particularly California and New York. In 14 of the 25 least affordable counties in the nation, a California address comes with a crushing housing cost.

Kings County, New York—better known as Brooklyn—stands as the nation's least affordable county, requiring an astonishing 103.1 percent of the typical local's wages to cover the costs of a median-priced home. It's followed closely by several California counties, including Orange County, where 90.3 percent of wages are needed. These areas are characterized by robust job markets in high-paying sectors like tech and finance, but relentless demand, severe inventory shortages, and restrictive zoning have pushed home prices to levels unattainable for even well-compensated workers.

In stark contrast, parts of the Midwest and Rust Belt offer a different story. In Cook County, Illinois (home to Chicago), ownership costs consumed a more manageable 26.4 percent of typical wages. Philadelphia County, Pennsylvania, was even more accessible, at 19.2 percent. These markets, while still major economic centers, benefit from a larger housing stock, less restrictive land-use policies, and more moderate population growth, keeping prices from spiraling out of control. This divergence is fueling conversations about domestic migration, as households seek relief from the financial pressures of high-cost coastal cities.

Beyond the Mortgage: The Total Burden of Ownership

The sticker price of a home is only the beginning of the story. The slight dip in the average 30-year fixed mortgage rate during the fourth quarter, from 6.34 percent to 6.15 percent, provided a small psychological and financial boost. However, forecasts from the Mortgage Bankers Association and Fannie Mae suggest that rates in 2026 are likely to stabilize in the mid-6 percent range, a far cry from the sub-4 percent rates that fueled the market just a few years ago. This "higher for longer" rate environment ensures that the cost of borrowing will remain a significant barrier.

ATTOM's report calculates that the typical monthly cost for a median-priced home, including the mortgage, property taxes, and insurance, was $2,015 in the fourth quarter. To afford this without exceeding the 28 percent debt-to-income threshold, a buyer would need an annual income of $86,374. This is more than $9,000 above the actual average national wage of $77,038, making homeownership mathematically impossible for the average American worker without stretching their budget to a breaking point.

In nearly a third of all counties, the situation is classified as "seriously unaffordable," with housing costs demanding over 43 percent of typical wages. This level of financial strain leaves households with little room for savings, emergency expenses, or other investments, impacting overall quality of life and long-term financial security.

As the market moves into 2026, both potential buyers and homebuilders remain cautious. Consumer sentiment surveys reflect a "wait-and-see" attitude, with many aspiring owners sidelined, hoping for a significant drop in prices or rates that analysts believe is unlikely to materialize. Meanwhile, builder confidence remains volatile, hampered by high financing costs and persistent labor shortages. This cautiousness on the supply side threatens to prolong the inventory crunch that underpins the affordability crisis. In response, policymakers at local, state, and federal levels are facing increased pressure to enact meaningful reforms, from overhauling restrictive zoning laws to expanding assistance for first-time buyers, in a bid to restore balance to a market that has left too many behind.