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 households in the Houston area could afford a median-priced home in the first quarter. A year ago, that number was slightly higher at 42%.

The median home price rose 2.2% to $334,100 during 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.

Meanwhile, the average interest rate increased from 6.37% to 6.75%, meaning the typical household needed an annual income of $93,600 to be able to afford a median-priced home. That’s up 4.9% from the first quarter of 2023, when households needed an annual income of $89,200.

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

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