Interest rates in the U.S. continue to rise. And if mortgage interest rates climb to 5 percent, as some forecasters expect, the price of a home that a typical buyer in Dallas-Fort Worth and Texas’ three other major metro areas could reasonably afford would fall by 9 percent, according to a new analysis from real estate website Zillow.

In DFW, a buyer with the median household income of $67,605 could reasonably afford a home priced at $410,700 at current interest rates (around 4.6 percent), Zillow says. But if the typical interest rate jumped to 5 percent, the same buyer would need to shop for a $372,100 home to maintain the same monthly mortgage payment, according to the Zillow analysis. That’s a price difference of $38,600.

Zillow bases its estimates on a monthly mortgage payment representing 30 percent of a homebuyer’s salary.

The Mortgage Bankers Association predicts the interest rate for the average 30-year, fixed-rate mortgage will increase to 5 percent during the second half of 2019, and to 5.1 percent in the following two years. This means Zillow’s forecast regarding the effects of a 5 percent interest rate will almost certainly materialize in 2019.

However, it’s “important to remember that rates on a typical mortgage remain very low by historic standards — especially given the type of strong economic growth we’ve been experiencing,” Aaron Terrazas, senior economist at Zillow, says in a release.

Recent hikes in mortgage interest rates have deterred some would-be buyers; surpassing the 5 percent mark likely would further dampen the enthusiasm of some potential homeowners.

“While it’s certainly important to keep track of home values and interest rates and plan your budget accordingly, buyers shouldn’t base their decisions on those moving targets. A home is the most valuable asset that most people will ever own, so it’s especially important not to gamble with it,” Terrazas says. “In the end, the best time to buy a home is always when the time is right for an individual buyer — often when they’re financially ready, when they’re relocating to a new area, or a major life event requires them to upsize or downsize.”

Under the 5 percent scenario, the homebuying picture would be much the same for residents of the Austin, Houston, and San Antonio metro areas as it would be for residents of DFW, Zillow’s analysis shows:

• At the median household income of $75,717, a buyer in the Austin area would watch the price of his or her reasonably affordable home drop from $459,900 to $416,700. That’s a difference of $43,200 — the biggest gap among Texas’ four major metros.
• At the median household income of $64,822, a buyer in the Houston area would see the price of his or her reasonably affordable home decline from $393,800 to $356,800. That’s a gap of $37,000.
• At the median household income of $59,287, a buyer in the San Antonio area would see the price of his or her reasonably affordable home slip from $360,100 to $326,300. That’s a gap of $33,800 — the smallest difference among Texas’ four major metros.

If a 5 percent mortgage rate becomes a reality, “many homebuyers in 2019 will need to reset their price points, with some making concessions about where they’re willing to live or how much space they want,” Zillow says. “Buyers being pushed toward less expensive segments of the market where inventory is also the tightest could, in turn, push prices more quickly upward, making those homes less affordable.”