Homes More Affordable in 3rd Quarter, Index Shows

WASHINGTON — Lower mortgage rates and higher incomes offset increases in home prices in the third quarter, making housing more affordable, the National Assn. of Realtors said Friday.

The real estate industry group’s housing affordability index rose to 127.0 in the third quarter, from 125.5 in the second quarter. It measured 124.0 in the third quarter of 1996.

When the NAR index measures 100, a family earning the median income has exactly the amount needed to buy a single-family home at the median price, using conventional financing and a 20% down payment.

“We experienced record volumes for existing home sales in August and September,” NAR President Russell Booth said in a statement. “The improvement in affordability conditions, combined with high consumer confidence, a good economy and low unemployment are factors in this extraordinary market.”

In the third quarter, the median price of a single-family home was $126,500, median family income was $43,744 and mortgage rates averaged 7.64%.

In the second quarter, the median home price was $123,700, the median family income was $43,291 and mortgage rates averaged 7.89%.

Qualifying income for conventional financing was $34,432 in the third quarter, down slightly from $34,491 in the previous quarter.

“We project the Housing Affordability Index will hover in the range of 126 to 136 over the next year, meaning the typical family will be in an excellent position to buy a home,” NAR consulting economist John Tuccillo said.

NAR said the first-time buyer index, which shows the ability of renters to qualify for a mortgage, rose to 80.8 in the third quarter from 79.9 in the previous quarter, meaning that first-time buyers had only 80.8% of the income needed to purchase a typical starter home.

The median price of a starter home rose in the third quarter to $107,500 from $105,100 in the second quarter and was also up from $102,400 in the third quarter of 1996.