Affordability Inches Up

The National Association of Realtors' composite Housing Affordability Index was at 135.3% during the third quarter of this year, up from 132.4 in the previous quarter. NAR 's chief economist David Lereah attributed the 2.9 percentage points increase to "a favorable change in mortgage interest rates, which are the biggest variable in housing affordability." During the quarter the typical household had 135.3% of the income needed to purchase a home at the median existing-home price of $161,800 if the homebuyer makes a 20% downpayment. (An index of 100 defined as the point where a median-income family has the exact amount of income needed to purchase.) NAR's first-time homebuyer affordability index shows that buyers aged 25-44 years with a $29,943 income had 78.5% of the income needed to purchase a typical starter home with 10% downpayment at a median price of $137,500.