HOUSING AFFORDABILITY IS BEST SINCE 1974

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, February 13, 1993                   TAG: 9302130133
SECTION: BUSINESS                    PAGE: A-10   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Short
HOUSING AFFORDABILITY IS BEST SINCE 1974
The ability of a typical American family to buy a home rose in the fourth quarter to its highest level in 18 1/2 years, boosted by rising incomes and falling mortgage rates, a real estate trade group said Friday.
The National Association of Realtors said its Housing Affordability Index was at 129.6 points in the October-December period, up from 120.2 a year earlier and the highest since it measured 127.8 in the April-June quarter of 1974.
The index measures the ability of a family earning the median income to purchase a median-priced previously owned home. The median means that half of the incomes are more and half are less, or that half of the homes cost more and half less.
When the index measures 100, the median family income equals the amount needed to purchase a median-priced home using conventional financing and a 20 percent downpayment. The median income in the fourth quarter was $36,837.
Thus, half of the families in the nation earned 129.6 percent of the $28,418 in income needed to purchase a home, whose median price in the fourth quarter was $103,400. The median price in the same period a year earlier was $99,100.
Mortgage rates averaged 7.74 percent in the final quarter of 1992, compared with 8.74 percent a year earlier.
But potential first-time buyers did not fare as well. An index measuring their ability to buy a starter home with an $87,900 median price was just 84.9, meaning half of those families earned just 84.9 percent of the $27,837 income needed to qualify for financing.

by Archana Subramaniam by CNB