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Houston-The Woodlands-Sugar Land Housing Affordability OutlookHouston-The Woodlands-Sugar Land Housing Affordability OutlookClare Losey, Harold D. Hunt, and Reece Neathery2023-02-23T06:00:00Ztechnical-report
Residential

​​​Purchase Affo​rdability

Affordability remained low in 4Q2022 amid higher mortgage interest rates and still-elevated home prices. Year-over-year (YOY) growth in both the median and first-quartile sales price was modest, at 3.6 percent and 3.1 percent, respectively (Figure 1 and Table 1).1 The YOY increase in family income followed years of significant rises (Table 2). The growth in median home price was outpaced by a substantial rise in median family income, at 13.8 percent.




The rapid rise in mortgage interest rates continued to diminish home purchasing-potential. Rates averaged 6.66 percent in 4Q2022, up considerably from 2Q2022 and 3Q2022, which averaged 5.27 and 5.62 percent, respectively (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 raise the federal funds rate an additional 75 basis points in 2023 to reduce inflationary pressures. Expectations dictate that mortgage rates will continue to dissipate slightly before settling in the 5 percent range. For more information on the effect of mortgage interest rates on purchase affordability, see "How Higher Interest Rates Affect Homebuying." 


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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.


To read this article in its entirety, download the pdf. ​

​Previous reports online: 

2022: 1Q2022, 2Q2022​, 3Q2022​

2021: 4Q2021​

Digital and Print2344https://www.recenter.tamu.edu/articles/technical-report/Houston-The Woodlands-Sugar-Land-Affordability https://assets.recenter.tamu.edu/Documents/Articles/2344.pdf

 

 

Houston-The Woodlands-Sugar Land Housing Affordability OutlookHouston-The Woodlands-Sugar Land Housing Affordability OutlookResidential
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