ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, May 2, 1996 TAG: 9605020029
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
The ability of the typical American family to buy a previously owned home was boosted by low mortgage rates during this year's first quarter to the highest level in two years.
The National Association of Realtors said Wednesday its Housing Affordability Index, which measures affordability for both first-time and trade-up buyers, was 131.6 points during the first three months of the year.
The latest reading, up from 129 in October-December and 126.9 in the first three months of 1995, was the highest since it reached 137.4 in the first quarter of 1994.
Realtors President Art Godi attributed the boost to low mortgage rates that opened the market to first-time buyers and triggered sales of second and third homes.
When the index measures 100 points, it means a family earning the median income has exactly the amount needed to purchase a median-priced existing home, using conventional financing and a 20 percent down payment.
The median is the midpoint, meaning half of the incomes are more and half are less, or that half of the houses cost more and half cost less.
In the first quarter, the index was 131.6, meaning half of the families had at least 131.6 percent of the income needed to qualify for the purchase of a home at the national median price of $114,700.
The real estate trade group said the first-time buyer index also rose in the first quarter, to 83.6 from 82 in the fourth quarter and 80.7 a year ago. It was the highest level since the index hit 88.5, also in the first quarter 1994.
The first-time index measures the ability of a renter family with wage earners between the ages of 25 and 44 to qualify for a mortgage on a starter home.
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