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

DATE: WEDNESDAY, May 12, 1993                   TAG: 9305120137
SECTION: BUSINESS                    PAGE: B5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

ABILITY TO BUY A HOME SOARS

The ability of the typical American family to buy a previously owned home rose in the first quarter to its highest level in nearly two decades, a real estate trade group said Tuesday.

The National Association of Realtors said its Housing Affordability Index stood at 131.7 points in January-March, up from 120.2 at the same time last year and the highest since the first quarter of 1974, when it measured 131.8.

The Realtors attributed the gain mainly to mortgage rates that fell to a 21-year low, averaging 7.55 percent, down from 8.36 percent during the same quarter of 1992.

Other factors included a continued rise in incomes and "more reasonably" priced homes.

"Together, these factors have lowered monthly payments and encouraged many who have been undecided to buy," said Realtors economist John A. Tuccillo.

The index measures the ability of a family earning the median income to buy a median-priced home.

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 down payment. The median income in the first quarter was $37,021.

Thus, half of families in the nation earned 131.7 percent of the $28,115 income needed to buy a median-priced home, which cost $104,200 in the first quarter.

The Realtors said a second index that measures the ability of renters to become first-time buyers also rose in the quarter, but remained well below the level for all buyers.

The Realtors' first-time buyer index was 86.2 in the first quarter, up from 79.6 at the same time last year. When this index equals 100, the typical first-time buyer can afford the typical starter home, which had a median price of $88,600, under existing financial conditions.

The median income of typical first-time buyers between the ages of 25 and 44 years was $23,743, or $3,810 less than the $27,553 needed to qualify for conventional financing covering 90 percent of the cost.

"While more first-time buyers are finding it a little easier to purchase a starter home, there still remain many young families and renters who want to own a home but are finding it difficult to come up with the necessary down payment to reach that goal," said Realtors President William S. Chee.

by CNB