Rising Mortgage Rates Price Out Austin Homebuyers

Mortgage rates have hit a 23-year high of 7.57% according to the Austin Board of Realtors, which may deter some homebuyers.

At current rates, a household needs to earn $107,000 annually to comfortably afford a typical Austin home. This could reach $114,000 if rates hit 8%.

Higher rates diminish purchase affordability and purchasing power, so each rate increase means households need higher incomes to buy the same home.

First-time and lower-income buyers are being priced out by high rates combined with limited inventory under $300,000.

Rates are high historically but were over 15% in the late 20th century, so purchasing power has only dropped about 4% since 2022.