Rising interest rates impacted housing affordability in the Greater Houston area in the second quarter this year compared to last year. This changed from 42% in the prior quarter, according to the report released Aug. 10.
The details
According to the report, affordability trends in the Greater Houston area include:
- The median home price in the Greater Houston area decreased 2.5% from last quarter, reaching $348,300 during the second quarter of 2023.
- Higher interest rates impacted home sales, leading to an increase in the monthly mortgage payment on a 30-year fixed-rate loan, including taxes and insurance. This payment surged from $2,230 a year ago to $2,400.
- The average interest rate escalated to 6.5% in the second quarter of 2023 from 5.27% in the previous year.
- A minimum annual income of $96,000 was recommended to afford a home.
What they’re saying
“Rising interest rates continue to weigh on potential homebuyers who are faced with the challenge of balancing affordability and opportunity,” HAR Chair Cathy Trevino said in the release. “Some prospective buyers are exercising caution due to the uncertain economic conditions, and this is driving strong consumer interest in the rental market.”
On the other hand
Lease prices for single-family homes decreased in most of the Greater Houston area, according to the Rental Affordability Index by the HAR.
- The median lease price dropped from $2,050 in 2022 to $2,000 in 2023.
- The decline in lease prices led to an increase in rental affordability, rising from 44% to 47% year over year.
- To afford the median lease payment for a home, households require a minimum annual income of $80,000.
