What Rising Interest Rates Mean for Houston Real Estate

by Mark Ngo

from the Alliance Team with RE/MAX Results


  • Houston's housing market has experienced a slowdown due to rising interest rates.
  • Higher interest rates have priced out potential buyers and made existing homeowners hesitant to sell.
  • Sales have declined, but increased inventory has stabilized prices.
  • Positive signs for the future include job growth, wage increases, and consumer confidence.

Hey there, folks! Today, let's talk about Houston's housing market and some of the challenges it's been facing lately. The rising interest rates have really been putting a damper on things. It seems that higher interest rates have made it harder for potential buyers to afford a new home. And even existing homeowners are thinking twice about selling, they know they'll likely be facing higher monthly payments if they buy a new place.

Declining Sales and Rising Costs:

As you can imagine, all of this has resulted in a decline in sales. In fact, the period from May to July of this year saw the weakest sales in the past five years. But hey, it's not all bad news! The good thing is that with fewer buyers in the market, there's been an increase in inventory. This means that there are more homes available.

For example, the 30-year fixed-rate mortgage averaged 6.84 percent in July, according to Freddie Mac. And 60 percent of current homeowners have mortgage interest rates below 4.0 percent, according to Zonda. Jumping from 4.0 to 6.8 percent (the July average rate) on a $400,000 home adds $558 to the monthly payment. Across the board, higher payments are keeping many would-be homebuyers out of the market.

from houston.org

Increased Inventory and Stabilizing Prices:

And here's the silver lining: with more options out there, home prices have actually stabilized. So while sales may be down, at least prices aren't skyrocketing. It's worth noting that the average price for a single-family home sold in July 2023 was the same as last year.

At the March ’22 peak, when the interest rate on a 30-year mortgage was 4.17 percent, the monthly note on a $335,000 home (median price then) was $2,412. Today, with rates at 6.84 percent, the monthly note on a median-priced home ($340,000) is $2,512. Though the cost of the home has risen only 1.5 percent over the period, the monthly payment has risen 17.3 percent. Again, this doesn't include higher insurance premiums and homeowners' association fees.

from houston.org

Positive Signs for the Future:

Now, let's look on the bright side of things. Despite these challenges, there are some positive signs on the horizon. Job growth is strong and wages are increasing. People are feeling more confident about their financial situations, which is always a good thing when it comes to buying a home. And even though interest rates aren't expected to drop anytime soon, there has been an increase in pending sales compared to last year.

So hang in there, Houston! While the housing market may be facing some obstacles right now, there's still hope for a rebound. The Alliance Team at RE/MAX Results is dedicated to helping you navigate these challenges and achieve your real estate goals. Whether you're buying or selling, our experienced team will provide expert guidance every step of the way. So don't let those rising interest rates get you down - we've got your back!