NAR: Housing Affordability Rises

The typical American family's ability to purchase a median-priced existing home increased in the fourth quarter, according to the National Association of Realtors.The NAR's composite Housing Affordability Index stood at 140.7, up from 135.9 in the third quarter but down from 141.3 a year earlier. The latest index number means that the typical household in the United States had 140.7% of the income needed to purchase a home at the fourth-quarter median existing-home price, which was $161,600. "Essentially, the drop in mortgage interest rates coupled with a modest rise in family income more than offset an increase in home prices," said NAR chief economist David Lereah. "We project housing affordability conditions to remain fairly stable during the first half of 2003, which means we'll continue to have historically high levels of home sales." The index measures affordability for homebuyers making a 20% downpayment. An index level of 100 is defined as the point at which a median-income family has the income necessary to buy a median-priced existing home. The NAR estimated the median family income to be $52,950 in the fourth quarter. The NAR can be found online at http://realtor.org.