Affordability worsens for Houston buyers, softens for renters

by Emily Marek

Even with year-over-year decreases in home prices, high interest rates have decreased homebuying affordability in the Houston area. According to the Houston Association of REALTORS® Housing Affordability Index, only 39% of households in the Bayou City could afford a median-priced home during the second quarter. That’s down 3% from last quarter.

The median home price fell 2.5% to $348,000 in Houston during Q2. Despite this, typical monthly mortgage payments rose from $2,230 to $2,400 annually, thanks to the average interest rate of 6.5%. That means that the average household needed an income of at least $96,000 to be able to afford a median-priced home on the market. A year ago, Houston households only needed to make $89,000 annually to make these mortgage payments.

Some Houston neighborhoods were identified as slightly more affordable — for example, in Harris County, Aldine households only need an annual income of $73,200 to afford a median-priced home. Other affordable areas were Stafford in Fort Bend County, where 63% of households could afford a median-priced home, and Willis in Montgomery County, where 74% of households could afford the same.

“Interest rates continue to weigh on potential homebuyers who are faced with the challenge of balancing affordability and opportunity,” said HAR Chair Cathy Treviño. “Some prospective buyers are exercising caution due to the uncertain economic conditions, and this is driving strong consumer interest in the rental market.”

The Houston single-family rental market, meanwhile, became slightly more affordable. In the second quarter of 2022, Houstonians paid a median of $2,050 per month for a single-family rental home. This year, that median fell to $2,000, meaning households only need to make $80,000 annually to afford their monthly rent.

A total of seven counties in the greater Houston area saw increases in rent affordability during the second quarter. Rental affordability only declined in one county: Liberty.

HAR also found that the most affordable rental region in the Houston area is Montgomery County. Nearly 60% of households there can afford the median monthly rent of $2,000.

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