Higher mortgage rates slightly cooling Houston housing market

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The Fed is expected to raise interest rates again this week, possibly another three quarters of a percent. While inflation is still at a 40-year-high, the interest rate hikes appear to be cooling the housing market.

The average rate for a 30-year fixed rate mortgage has nearly doubled from 3.11% a year ago to 5.82%, according to the Mortgage Bankers Association.

RELATED: As inflation hits 9.1%, bigger rate hikes are possible, economists say

MBA data shows home sales have slowed for the last five months, mortgage applications are down 19% year over year, and the inventory of homes for sale is up for the first time in three years, spiking 9.6%.

Home prices continue to climb, though not as fast.  The National Association of Realtors says home prices went up 13.4% in June to an average of $416,000.

Rents continue to rise too, up 14% over this time last year, and there are more single-family homes for rent, according to Realtor.com.  

RELATED: Homebuyers considering alternative mortgages in hot market

So is now the time to rent or buy?

“In the vast majority of the 50 largest markets, it’s better to rent than buy if you’re looking at the monthly cost of rent versus the monthly cost of buying,” said Danielle Hale with Realtor.com.  

Realtor.com says the cost to own a home in the 50 largest metros is still about 30% higher than the cost to rent.  

“Maybe you’re just starting out in your career, or you’re single and unattached, you don’t know what your family situation is going to look like. That ups the scale in favor of renting,” said Hale.


But if you’re planning to stay in an area for at least five years, Hale says buying a home, “is a great way to build up your net worth, your future financial security. But it does mean you’re committed to that one location for a period of time.”

The Houston Association of Realtors says there are more rental homes available in Houston, but rents have hit an all-time high for them, at an average $2,278 a month.

Realtor.com offers this calculator to help you determine whether you should rent or buy.