NAR: Housing Affordability Fell in 2Q

Housing affordability fell in the second quarter of 1998, but remained near the highest level since the early 1970s, according to the National Association of Realtors.The NAR's composite Housing Affordability Index stood at 131.1 for the second quarter, 3.8 points off the 134.9 recorded in the first quarter but 6.1 points higher than its 125.0 level a year earlier. The index indicates that half of the nation's households had at least 131.1% of the income needed to buy a median-priced resale home. Under these conditions, a family earning the median income of $44,828 could afford a home costing $171,900, the NAR said. Fred Flick, the NAR's vice president of economic research, said the slip in affordability stemmed from a seasonal increase in home prices. "With more people trading up to more expensive homes, an increase in the median existing-home price offset a modest increase in family income and a slight decline in mortgage interest rates," he said. The NAR said the last time housing affordability was sustained at a higher level was in 1973, when the index reached 147.9. The trade association said it expects affordability to improve in the third and fourth quarters as a result of lower interest rates, rising income, and stable prices. The NAR's website address is http://www.realtor.com.