HOUSTON HOUSING MARKET SEES IMPROVED AFFORDABILITY
Houston Housing Affordability Sees Positive Shift!
For the first time since 2020, housing affordability in the Houston area has improved. In the third quarter of 2024, 38% of local households could afford a median-priced home, up from 35% the previous year. This change is attributed to easing interest rates and stabilizing home prices. The median home price increased slightly by 0.8% to $348,200, while the average interest rate decreased to 6.02% from 7.04% in 2023. Consequently, the required minimum annual income to purchase a median-priced home dropped by 6.1% to $98,400.
Forty percent of Houston-area households could afford to buy a median-priced home in Q4 2024
HOUSTON — (February 6, 2025) — There is encouraging news for prospective homebuyers in Houston: housing affordability improved for the second quarter in a row in 2024, according to new data from the Houston Association of Realtors (HAR).
HAR's Housing Affordability Index shows that 40 percent of Houston-area households could afford to purchase a median-priced home in the fourth quarter of 2024. This marks an increase from 38 percent during the same period in 2023, signaling a positive shift in market dynamics.
The median home price in the Greater Houston area edged up by 1.1 percent in the final quarter of last year to $340,200. The average mortgage rate decreased to 6.63 percent from 7.30 percent during the same time in 2023. These two factors contributed to lower housing costs for prospective buyers in the fourth quarter. The monthly payment on a 30-year fixed-rate mortgage, including principal, taxes and insurance, fell to $2,360 compared to $2,460 the prior year. Households needed to make a minimum annual income of $94,400 to buy a typical home, representing a 4.1 percent decrease year-over-year.
In Texas, 39 percent of households could afford a median-priced home in the fourth quarter compared to 36 percent the prior year. A minimum annual income of $94,400 was needed to qualify for the purchase of a $339,000 home statewide.
The national median home price climbed 4.8 percent year-over-year to $410,100, according to the latest data from the National Association of Realtors (NAR). During the fourth quarter, 36 percent of households nationwide could afford the median-priced home compared to 34 percent during the same time in 2023.
The chart below shows how the minimum annual household income needed to purchase a home has changed year-over-year.
“The continued improvement in affordability is welcome news for Houstonians looking to achieve the dream of owning a home,” said HAR Chair Shae Cottar with LPT Realty. “Moderating home prices and easing mortgage rates are creating more opportunities for buyers, but many still face challenges. There are thousands of down payment assistance programs available to help turn that dream into reality.”
Rental Affordability Update
Single-family home rental prices increased across most of the Houston area in the final 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 average lease price for a single-family home rose 5.0 percent year-over-year to $2,100. Forty-five percent of households in the area earned the $84,000 minimum annual income required to afford the median lease payment. This does not include the security deposit or cost of utilities.
The chart below shows how the median lease price for a single-family home has changed year-over-year.
Highlights from the Q4 2024 Housing & Rental Affordability Report:
- 40% of households in the Greater Houston area could afford a median-priced home in the fourth quarter of 2024, that is up from 38% during the same time in 2023.
- The median home price was $340,200, which is 1.1% higher than in 2023.
- The monthly mortgage payment on a 30-year fixed-rate loan, including principal, taxes and insurance, was $2,360 compared to $2,460 in 2023.
- Households needed to make a minimum annual income of $94,400 to buy a median-priced home, which is down 4.1%.
- The median lease price in the Houston area increased 5.0 percent year-over-year to $2,100.
For HAR’s full Housing and Rental Affordability Reports and data tables, click
HERE.
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