Fed Rate Cuts May Lower Borrowing Costs But Risk Driving Home Prices Higher
The cost of an affordable house and the income needed to afford it seems to rise with almost every quarter, according to analyses by ATTOM. In 3Q 2025, the U.S. hit a record high median home price of $375,000. That was 2% higher than in the second quarter and 4.8% higher than 3Q 2024.
“Nationwide, the typical monthly cost of mortgage payments, homeowners insurance, mortgage insurance, and property taxes was $2,123 in the third quarter of 2025. That was essentially the same as the previous quarter but up 6 percent from the same time last year,” ATTOM noted.
“Of the 580 counties in ATTOM's analysis, 44.7 percent (259) had worse affordability index ratings in the third quarter than in the second.”
The Fed’s recent rate cutting could also prove to be a double-edged sword in the way it affects mortgage rates, the report added. On the one hand, it could help some buyers keep up with the rising cost of homes. On the other, it could stimulate home-buying and drive prices up again.
Another problem is that home prices have escalated 58% since 2020. But wages in half the counties analyzed lagged behind in the third quarter and more than in the second. “In 79 percent (460) of the 580 counties in ATTOM's analysis, home ownership expenses exceeded 28 percent of a typical resident's wages, making owning a home unaffordable by standard guidelines,” the report stated, referring to 1Q 2025 data.
Counties encompassing some of the nation's largest cities, such as Los Angeles, Chicago, and Brooklyn and Queens in New York City fell into this category.
Three-quarters of the 580 counties analyzed saw median home prices rise year over year. The highest spikes were in Cuyahoga County, OH, Fulton County, GA, Honolulu County, HI, Suffolk County, NY and Allegheny County, PA.
There were some exceptions to this trend. The largest annual drops in median home price were in New York County, Sacramento and Contra Costa Counties, CA, Hillsborough County, FL and Harris County, TX.
The largest counties where residents might find homes for less than 28% of their wages were Harris County, Wayne County, MI, Cuyahoga County, and two Pennsylvania counties, Philadelphia and Allegheny. To meet this standard and buy a $375,000 home, a resident would need an annual income of $90,989.
Three of the counties with the lowest income requirements to buy a house were in Pennsylvania: Cambria, Schuylkill, and Mercer. The group also included Robeson County, NC and Macon County, IL.
Source: GlobeSt/ALM