NAR: Housing Affordability Slips

The typical American family's ability to buy a median-priced home slipped in the third quarter as a result of higher home prices, but housing affordability conditions remained favorable, according to the National Association of Realtors.The NAR's composite Housing Affordability Index stood at 128.6 in the third quarter, down from a revised 132.3 in the second quarter and a revised 136.2 a year earlier. The latest index number means that the typical household in the United States had 128.6% of the income needed to purchase a home at the third-quarter median existing-home price, which was $188,500. "When you look at the monthly costs of housing, the typical family who bought a median-priced home last quarter is spending only 19.4% of their income for mortgage principal and interest, which is well within lender guidelines," NAR chief economist David Lereah said. "If you look back to the early 1980s, monthly costs were as high as 36%, and in the early 1990s they were over 20%. So in historical terms, housing affordability is healthy." The NAR can be found online at http://realtor.org.