Home prices were more affordable than historic averages in nearly half of the counties in the United States, according to the 2020 second quarter U.S. Home Affordability Report from the real estate analytics company ATTOM Data Solutions. However, homeownership was still unaffordable for average wage earners in about three out of four markets, and the report warned that the potential impact of the COVID-19 pandemic on housing affordability is not yet clear.

The report analyzed 406 counties to determine whether a median priced home in the market would be affordable to a buyer earning the average wage in the county, as determined by Bureau of Labor Statistics data. Using this information, researchers were able to determine how much of the average income would be necessary to make monthly payments, assuming a 3 percent down payment.

Forty-nine percent of the counties were more affordable than historic norms, an improvement from 31 percent in the second quarter of 2019. ATTOM Data Solutions suggested that increases to average wages as well as lower mortgage costs due to declining interest rates have helped offset ongoing home price increases.

At the same time, 74 percent of the markets were considered unaffordable for average wage earners. A county was considered affordable if the monthly payments—including the mortgage, property taxes, and homeowners insurance—required no more than 28 percent of an average worker's wages. In 68 percent of the counties, homeownership costs required at least 30 percent of the average worker's income.

"The latest affordability numbers reveal a win-win situation for sellers as well as buyers. Prices are rising again around the country during the current home-buying season, despite worries that the economic impact of the coronavirus pandemic would halt the nine-year runup in home values," said Todd Teta, chief product officer with ATTOM Data Solutions. "But a combination of wage gains and declining mortgage rates are helping to override the increases and make homes more affordable in large swaths of the United States."

In more than half of the counties—52 percent—median home prices were up by at least 5 percent compared to the previous year. In 66 percent of the counties, home price appreciation was outpacing wage growth.

Thirty-five percent of the counties required an average annual wage of at least $75,000 to purchase a median priced home. The highest average wages necessary to afford the market's typical home included $341,401 in New York County, or Manhattan; $332,317 in San Francisco County; and $326,709 in San Mateo County, outside San Francisco. Eighteen of the 25 markets requiring the highest wages to own a home were in California or New York.

In Marin County in the Bay Area of California, a median priced home was completely out of reach of the average earner, requiring 109.4 percent of the typical worker's wages. The debt-to-income ratio stood at 98.4 percent in Santa Cruz County, Calif. and 98.3 percent in Kings County, N.Y.

In the 41 counties with a population of at least 1 million people, only Atlanta, Cleveland, Detroit, Houston, and Philadelphia required less than 30 percent of average wages to purchase a median priced home.

The most affordable market was Macon County, Ill., requiring just 10.4 percent of the average worker's wages to buy a home. The necessary share was 13.4 percent in Rock Island County, Ill.; 15.1 percent in Montgomery County, Ala.; and 17.9 percent in Oswego County, N.Y.

An average wage of just $19,572 was enough to afford a median priced home in Macon County, Ill. Other markets requiring a modest income to purchase a median priced home included Montgomery County ($25,726); Trumbull County, Ohio ($26,444); and Rock Island County ($27,856).

In New London County, ATTOM Data Solutions determined that the average worker in the second quarter of 2020 earned $57,161 a year while the median home price was $235,500. Using these figures, the average buyer would need to put 32.8 percent of their income toward payments on a median priced home.

Teta warned that the ongoing effects of the pandemic may hurt both home prices and affordability.

"Virus pandemic concerns are still quite valid and may show up in the coming months, which could hurt prices as well as affordability," he said. "That remains a significant potential cloud hanging over the market. But as of now, things are looking up for people on both sides of the buying equation."

The report focused on counties with a population of at least 100,000 people and at least 50 single-family home or condominium sales in the second quarter of 2020.