(NEXSTAR) – U.S. home sales fell in September for the eighth straight month, and thanks to high prices and rising mortgage rates, things aren’t getting any easier for first-time home buyers.
Real estate site Point2Homes.com looked at the 50 largest cities in the U.S. and calculated whether the average renter could comfortably afford the average starter home.
Texas fared better than some states, but there was still not a single city where the median first home reached the affordability threshold.
The survey found that only four major U.S. cities met that criteria after mortgage rates jumped to 7 percent in October: Detroit, Tulsa, Memphis and Oklahoma City.
Since August, when rates were closer to 5.5 percent, Kansas City, Missouri, and Baltimore have dropped from the list of affordable cities. To qualify, the monthly mortgage payment had to be no more than 30% of the tenant’s household income, assuming a 20% down payment.
The most affordable city in Texas is Houston at 15th, with an average starting home price of $196,661 and an average renter’s income of $41,364, which is 69% of the money needed to comfortably make mortgage payments. In 17th place is Dallas with a median home price of $221,140 and an income of $45,047.
| City/Affordability Rank 50 | Average starting price of a home | Average income | Tenant household income % of required income at 7% rate |
| Houston (15) | $196,661 | 41,364 dollars | 69% |
| Dallas (17) | $221,140 | $45,047 | 68% |
| El Paso (20) | $156,454 | 32,231 dollars | 63% |
| Fort Worth (21) | $232,034 | 44,238 dollars | 63% |
| San Antonio (25) | $217,069 | $38,554 | 58% |
| Arlington (30) | $269,683 | $42,826 | 53% |
| Austin (41) | 454,836 dollars | $55,640 | 43% |
For the breakdown of all 50 cities and the full methodology see the report on the Point2Homes site.
Higher mortgage rates reduce the purchasing power of home buyers, resulting in fewer people being able to afford to buy a home. Consider that a buyer who received 3% interest on a 30-year mortgage to buy a $300,000 home last year could only borrow $190,000 today for the same monthly payment.
“That’s why buyers are basically being pushed out of the market,” said Lawrence Yoon, chief economist for the National Association of Realtors.
Mortgage rates rose sharply along with the yield on the 10-year Treasury note, which rose on expectations that the Federal Reserve will continue to raise interest rates in an attempt to reduce inflation. Last week, the 10-year yield hit its highest level since June 2008.
In September, U.S. home sales fell 1.5 percent from the previous month and 23.8 percent from the torrid pace of the previous year, according to the NAR. First-time buyers made up 29% of sales for the second month in a row.
The Associated Press contributed to this report.