Interest Rates Still Pose A Barrier to Affordability for Houston Buyers

Interest rates remain a barrier to housing affordability in Houston, according to the latest Housing and Rental Affordability Report from the Houston Association of REALTORS® (HAR).

Only 40% of Houston-area households could afford a median-priced home in the first quarter. A year ago, this figure was slightly higher, at 42%.

The median home price rose 2.2% to $334,100 in the first quarter, increasing the average monthly housing payment – ​​including the mortgage on a 30-year fixed loan, taxes and insurance – from $2,230 in the first quarter of 2023 to $2,340.

At the same time, the average interest rate increased from 6.37% to 6.75%, meaning a typical household needed an annual income of $93,600 to be able to afford a home at the median price . This represents an increase of 4.9% compared to the first quarter of 2023, when households needed an annual income of $89,200.

“High interest rates and steadily rising property prices are keeping some potential buyers out of the market,” HAR President Thomas Mouton said in a press release. “While there are still opportunities in the market, it has certainly become more difficult for some consumers to purchase a home.”

Rental prices for single-family housing also became less affordable during the first quarter. A year ago, 48% of Houston households could afford a single-family rental at the median price of $1,950 per month. In the first quarter of this year, that price increased 2.6% to $2,000, meaning households would need an annual income of $80,000 to be able to afford the median monthly rent. Only 47% of Houston households could afford it.