High mortgage rates stifle home ownership

HOUSTON — (By Dale King, Realty News Report) — Persistently high interest rates continue to keep home ownership out of reach for many Houston area residents who might otherwise be poring over listings in search of a new domicile, says new data from the Houston Association of Realtors (HAR).

The organization’s most recent Housing Affordability Index shows that only 40 percent of households in Greater Houston could afford to buy a median-priced home during the first quarter of 2024, down from 42 percent for the same period in 2023.

The cost of that median-priced home in the Houston metro increased 2.2 percent to $334,100 during the first three months of this year. This meant the monthly mortgage payment on a 30-year, fixed-rate loan, including taxes and insurance, rose to $2,340 this year from $2,230 a year ago.

The average interest rate in the Space City went up to 6.75 percent as 2024 opened, compared to 6.37 percent during the first months of 2023. As a result, households needed 4.9 percent more annual income this year than they did a year ago to buy a median-priced home.

Home purchasers managed to nail the home deal in 2023 with a yearly wage of $89,200. This year, the same task required an annual salary of $93,600.

Fewer households throughout Texas, 38 percent in fact, could afford to purchase a median-priced home in the first quarter of this year, down from 40 percent in the first quarter of 2023. A minimum annual household income of $94,000 was needed this year to purchase a $334,950 median-priced home statewide.

The national median-home price rose 5 percent year-over-year to $389,400, according to the latest data from the National Association of Realtors (NAR). Affordability dipped to 36 percent in the first quarter of 2024, down from 39 percent at this time last year.

The list below shows how the minimum annual household income needed to purchase a home has changed year-over-year.

Metro Houston: Annual household income of $93,600 was needed in the first quarter of 2024, up $4,400 or 4.3 percent from $89,200 in Quarter 1 2023.
Metro Austin: Wage earners had to bring home $130,800 a year to purchase a home in the first quarter of 2024, up from $127,600 in the first quarter of 2023, an increase of $3,200 or 2.5 percent.
Metro Dallas: Annual household income of $106,000 was needed in the first quarter of 2024, up from $101,600 in the first quarter of 2023, an increase of $4,400 or 4.3 percent.
Metro San Antonio: Breadwinners had to pocket a total of $85,600 a year during the first quarter of 2024 to buy a median-priced single-family residence. That was down $1,600 or -1.8 percent from $87,200 in Quarter 1 2023.
The State of Texas: Annual household income of $94,000 was needed in the first quarter of 2024, up from $90,000 in the first quarter of 2023, an increase of $4,000 or 4.4 percent.
The USA: Annual household income of $101,200 was needed in the first quarter of 2024 to buy a median-priced home, up from $93,600 in the first quarter of 2023, an increase of $7,600 or 8.1 percent.
Compared to the first quarter of 2023, housing affordability declined in seven tracked counties — Brazoria, Fort Bend, Galveston, Harris, Liberty, Polk and Walker. Affordability increased in six counties — Austin, Grimes, Matagorda, Montgomery, San Jacinto and Wharton. The wage figure was unchanged in two counties, Chambers and Waller.

“Elevated interest rates and steadily rising home prices are squeezing some potential buyers out of the market,” said HAR Chair Thomas Mouton of Century 21 Exclusive Properties. “While there are still opportunities, it’s certainly become more challenging for some consumers to buy a home.”

Lease prices for one-family homes saw moderate gains across most of the Houston area in the first quarter of 2024, says data in HAR’s Rental Affordability Index, which measures the percentage of households that can afford to pay the median monthly rent for a single-family domicile. The median lease price increased 2.6 percent year-over-year to $2,000 in the first quarter of this year.

Rental home affordability was down slightly from 48 percent in the first quarter of last year to 47 percent. Households in the Houston area needed to take in a minimum annual income of $80,000 to afford the median lease payment on a home, not including security deposit or cost of utilities.

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