Forty percent of Houston-area households could afford to buy a median-priced home in Q1 2024

Stubbornly high interest rates continue to keep the dream of homeownership out of reach for many households in the Greater Houston area, according to new data from the Houston Association of Realtors (HAR).

HAR’s Housing Affordability Index reveals that 40 percent of households in the Houston area could afford a median-priced home in the first quarter, down from 42 percent in 2023.

The median home price in the Houston area rose 2.2 percent to $334,100 in the first quarter of this year. The monthly mortgage payment on a 30-year, fixed-rate loan, including taxes and insurance, climbed to $2,340 from $2,230 a year ago. The average interest rate was 6.75 compared to 6.37 percent during the same time in 2023. As a result, households needed 4.9 percent more income annually than they did a year ago to buy a median-priced home with a minimum income of $93,600, according to the data.

Fewer households in Texas, 38 percent, could afford to buy 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 to qualify for the purchase of a $334,950 median-priced home statewide.

The national median home price rose 5.0 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 chart below shows how the minimum annual household income needed to purchase a home has changed year-over-year.

“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 in the market, it’s certainly become more challenging for some consumers to buy a home, and that’s why it’s important to work with a REALTOR®. An agent can help find budget-friendly homes and explore down payment options.”

Lease prices for a single-family home saw moderate gains across most of the Houston area in the first quarter of 2024, according to HAR’s Rental Affordability Index, which measures the percentage of households that can afford to pay the median monthly rent for a single-family home. 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 earn a minimum annual income of $80,000 to afford the median lease payment on a home. This does not include the security deposit or cost of utilities.

The chart below shows how the median lease price for a single-family has changed year-over-year.

Highlights from the Q1 2024 Housing & Rental Affordability Report:

  • 40 percent of households in the Greater Houston area could afford a median-priced home, down from 42 percent in the first quarter of 2023.
  • The median home price rose 2.2 percent to $334,100 in the Houston area.
  • The monthly mortgage payment on a 30-year, fixed-rate loan, including taxes and insurance, climbed 4.9 percent to $2,340.
  • Households needed 4.9 percent more income annually than they did a year ago to buy a median-priced home with a minimum income of $93,600.

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) and was unchanged in two counties (Chambers and Waller).

The median lease price increased 2.6 percent year-over-year to $2,000.

Compared to the first quarter of 2023, rental affordability declined in nine tracked counties. Rental affordability increased in Chambers and Waller Counties.

For HAR’s full Housing and Rental Affordability Reports and data tables, click HERE.