Homeownership Remains Out of Reach for Many Americans Amid Rising Costs

A new report from ATTOM, the U.S. Home Affordability Report for Q2 of 2025, reveals that affordability continues to deteriorate for the average American homebuyer, with rising home prices and mortgage rates pushing homeownership further out of reach for millions. For the fourteenth consecutive quarter, a larger portion of the average homeowner’s income is being spent on purchasing and maintaining a home compared to historical norms.

The report shows that in nearly every county where enough data was available, median-priced homes and condos became less affordable in Q2 2025. This trend follows an increase in mortgage application payments in May, with the national median payment rising to $2,211 from $2,186 in April. Despite these challenges, many homebuyers remain eager to enter the market, fueled by rising inventory levels and slowing home-price growth.

Rising Payments and Costs Pressure Homebuyers

In Q2 2025, the median price of a home in the U.S. reached $369,000, marking a 5% increase from Q1 2025. This surge in prices comes despite a slight drop in home prices during the first quarter of the year. At the same time, mortgage rates remain near 7%, exacerbating affordability challenges.

According to Rob Barber, CEO of ATTOM, the situation is becoming more dire as home prices continue to rise and wages barely increase. “The squeeze is really on for would-be buyers as we enter the summer months, typically the most active season for the housing market,” Barber said. “There’s simply no relief on mortgage rates, and wages aren’t keeping up.”

Home Prices Outpace Wage Growth

Since Q1 2020, home prices have increased by a staggering 55.7%, while average wages have only risen by 26.6%. This growing disparity between the cost of homes and what Americans are earning makes it harder for potential buyers to afford a home.

ATTOM’s affordability calculations show that the median-priced single-family home and condo now require 33.7% of the average American household’s yearly income. This is significantly higher than the typical 28% share recommended by lenders. Even though the housing market has cooled slightly in terms of price growth, this remains well above what most Americans can reasonably afford.

Regional Trends and Price Fluctuations

While national home prices have continued to rise, there are regional variations in affordability. Some areas have seen large increases in home prices, such as:

• Bronx County, NY: +14%
• Suffolk County, NY: +6%
• Queens County, NY: +6%
• Philadelphia County, PA: +6%
• Hennepin County, MN: +5%

On the other hand, there have been some areas where prices have dropped, including:

• Contra Costa County, CA: -5%
• Travis County, TX: -4%
• Alameda County, CA: -3%
• New York County (Manhattan), NY: -3%
• Hillsborough County, FL: -3%

These fluctuations further illustrate how local conditions and market dynamics can shape home affordability, with some regions facing significant price hikes and others seeing prices cool slightly.

Widespread Affordability Issues

In a concerning trend, 99.3% of counties analyzed showed that owning a median-priced home in Q2 of 2025 was less affordable than historical norms. This is a slight increase from Q1 2025, where 96.9% of counties were facing similar challenges.

A closer look at large metro areas reveals some of the nation’s most populous counties are also grappling with affordability issues, such as:

• Los Angeles County, CA
• Cook County, IL (Chicago)
• Maricopa County, AZ (Phoenix)
• San Diego County, CA
• Orange County, CA (outside Los Angeles)

In these areas, the average resident is spending more than 28% of their income on housing costs, surpassing traditional affordability guidelines.

Disparities Persist Across Income Levels

The affordability gap is widening not only across regions but also within different income groups. The report highlights that the cost burden is increasingly affecting middle-income households as well. In areas like Harris County (Houston), Wayne County (Detroit), and Allegheny County (Pittsburgh), the number of households spending more than 30% of their income on housing has significantly increased.

This growing disparity shows that even for households earning a median income, the dream of homeownership is becoming increasingly difficult to achieve, especially as housing costs continue to climb.

The Path Forward

As home prices and mortgage payments continue to rise, the gap between homeownership and median-income earners is widening. Policymakers, builders, and financial institutions will need to explore solutions to ease the strain on potential homeowners. This includes not only addressing supply-side issues by increasing affordable housing options but also examining the role of mortgage rates and financial regulations in ensuring housing remains within reach for future generations.

While the report paints a grim picture of homeownership for many, it underscores the urgency of taking action to address affordability and make homeownership a reality for more Americans. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.