|Houston-The Woodlands-Sugar Land Housing Affordability Outlook||Houston-The Woodlands-Sugar Land Housing Affordability Outlook||Clare Losey, Harold D. Hunt, and Reece Neathery||2022-05-05T05:00:00Z||technical-report||Residential|
The first quarter saw an uptick in both the median sales price and first-quartile sales price for the Houston-The Woodlands-Sugar Land MSA (Figure 1).1 The year-over-year (YOY) growth in median sales price and first-quartile home price in the Houston-The Woodlands-Sugar Land MSA measured 16.4 percent and 17.2 percent, respectively, significantly higher than average YOY growth for the first quarter (Table 1). The median sales price measured $320,000; the first-quartile sales price, $249,000. Meanwhile, following years of generally sluggish growth, family income increased considerably. From 2021 to 2022, median family income in the Houston-The Woodlands-Sugar Land MSA increased 13.8 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.
Meanwhile, mortgage interest rates remained low by historical standards, averaging 3.82 percent in 1Q2022 (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 one percentage point in March, rising from 3.76 percent to 4.67 percent. For more information on the effect of mortgage interest rates on purchase affordability, please 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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