Rapidly rising mortgage rates have taken a hammer to home affordability across the U.S., even as some areas like Dallas-Fort Worth continue to see double-digit price gains.
Buyers looking to finance the typical D-FW house with a 20% down payment needed an income of about $87,000 to qualify last quarter, according to a new report from the National Association of Realtors. D-FW’s median household income is $75,975.
The median price of a single-family North Texas home was $390,100 last quarter, up 13% from the same period last year, according to NAR.
Nationally, the median income needed to qualify to buy a $398,500 home in the U.S. with a 20% down payment has risen to about $88,000 — almost $40,000 more than what buyers needed to make before the pandemic shook up the housing market.
The monthly mortgage payment on the typical U.S. single-family home with a 20% down payment was $1,840 last quarter, up 50% year over year.
NAR considers a mortgage as unaffordable when principal and interest payments surpass 25% of a family’s income. First-time buyers spent about 38% of their income on mortgage payments in the third quarter.
Single-family home sale prices increased year over year in almost all metro areas tracked by NAR, with the national median price rising 8.6% to $398,500. But only 46% of the markets saw double-digit price increases like D-FW did, down from 80% in the second quarter.
“Much lower buying capacity has slowed home price growth, and the trend will continue until mortgage rates stop rising,” said NAR chief economist Lawrence Yun.
West Coast markets remain the most expensive, topped by San Jose’s median home price of nearly $1.7 million.
“The more expensive markets on the West Coast will likely experience some price declines following this rapid price appreciation, which is the result of many years of limited home building,” Yun said. “The Midwest, with relatively affordable home prices, will likely continue to see price gains as incomes and rents both rise.”
Of the four major Texas metro areas, San Antonio home prices have increased the most to $342,700, a 13.9% year-over-year gain.
With a still tight supply and continued population growth, the region’s housing market is not declining as quickly as others nationwide.
Still, D-FW home sales saw the first 20%-plus decline since the start of the COVID-19 pandemic in October, according to the Texas Real Estate Research Center at Texas A&M University and North Texas Real Estate Information Systems.
