Interestingly, new home builders run statistics to determine a "priced out estimate" index. Per an article from the Home Builders Association, Great Austin (HBA) the National Association of Home Builders (NAHB) just released the updated “priced out estimates” for 2019, showing how higher new home prices and interest rates affect housing affordability. The 2019 U.S. estimates indicate that a $1,000 increase in the median new home price would price 127,560 U.S. households out of the market. Among all the states, Texas registered the largest number of households priced out of the market by a $1,000 increase in the median-priced home (11,152), followed by California (9,897) and Ohio (7,341). For the Austin-Round Rock MSA, the median new home price is $349,800. This means 1,090 potential households are priced out of the market with each $1,000 increase in the median home price. Eventually, this can impact the number of home sales, especially if interest rates rise substantially. The rule of thumb to determine how much interest rates need to rise before buyers will experience a significant impact in their mortgage payment is 2%. The good news is that economists expect interest rates to remain stable during 2019.
NAHB Releases 2019 “Priced Out” Estimates
Jan 28, 2019