|Dallas-Fort Worth-Arlington Housing Affordability Outlook||Dallas-Fort Worth-Arlington Housing Affordability Outlook||Clare Losey, Harold D. Hunt, and Reece Neathery||2022-08-01T05:00:00Z||technical-report||Residential|
The second quarter saw a continued uptick in both the median sales price and first-quartile sales price for the Dallas-Fort Worth-Arlington MSA (Figure 1).1 The year-over-year (YOY) growth in the median sales price and first-quartile sales price in the Dallas-Fort Worth-Arlington MSA measured a robust 20.8 percent and 23.6 percent, respectively, significantly higher than average YOY growth for the second quarter (Table 1). The median sales price measured $428,000; the first-quartile sales price, $330,000. Meanwhile, following years of generally sluggish growth, family income witnessed robust growth. From 2021 to 2022, median family income in the Dallas-Fort Worth-Arlington MSA increased 9.4 percent (Table 2). However, as long as the rise in home prices continues to outpace the increase in income, purchase affordability, or the ability of a household to buy a home, will continue to diminish.
At the same time, mortgage interest rates ticked upward, averaging 5.27 percent in 2Q2022 (Figure 2). All other things being equal, lower (higher) mortgage interest rates translate into lower (higher) monthly mortgage payments and ease (diminish) purchase affordability. The Federal Reserve is widely anticipated to continue to raise interest rates over the near-term to reduce inflationary pressures, which will likely prompt additional increases in mortgage interest rates. The average rate on the 30-year fixed-rate mortgage increased nearly 3 percentage points in the first half of 2022. For more information on the effect of mortgage interest rates on purchase affordability, see “How Higher Interest Rates Affect Homebuying."
1 The first quartile reflects the lowest-priced 25 percent of homes sold in a particular geography. The first-quartile sales price represents the highest home price among those lowest-priced 25 percent of homes sold. If the price of the lowest 25 percent of homes sold ranges from $100,000 to $150,000, then the first-quartile sales price would be $150,000.
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