The recent construction boom may be a mixed blessing for first-time homebuyers because the rising cost of residential development is reducing affordability in several U.S. markets.

U.S. Housing Markets, a Canton, Mich., housing research firm, said in its latest newsletter that it is getting harder for families to find homes within their means. If not for low interest rates, many young homebuyers would not qualify for loans on increasingly expensive new homes.

Kathleen M. Burns, director of the single-family division of the Massachussetts Housing Finance Agency, said low mortgage rates have helped but do not solve the housing shortage in Boston.

The agency is a quasi-public lender to low- to moderate-income borrowers in the metropolitan area, which has been identified by U.S. Housing Markets as less affordable.

Massachusetts is so densely populated "that there is very little land available for new construction," Ms. Burns said, "and what is available has gotten very, very expensive. That is definitely a problem. Many first-time homebuyers who wanted to live in the city have had to move further out to get affordable places."

Ms. Burns said the Massachusetts housing agency has recently had to raise its income ceiling in order to let more people qualify for agency loans, which have lower rates and more favorable underwriting criteria.

"Before, a family of one or two could only be making $50,000 to qualify for those loans," Ms. Burns said. "Now we have had to raise that amount to $60,000. We had to raise it in order to qualify more folks because they just could not get loans otherwise."

Existing homes sold 11% faster in November than in the same month a year earlier, according to the National Association of Realtors.

The association said it expects 1998 sales of existing homes to total 4.78 million, more than a 13% increase from 1997.

New-home sales were up 13% in November, and housing starts that month ran 10% higher than the year before, according to the Census Bureau.

According to U.S. Housing Markets, the rapid expansion of construction and scarcity of developable land are only parts of the problem for younger households.

Extending sewer and water service is also growing more expensive as the number of single-family homes multiplies. Zoning restrictions, minimum lot size requirements, and residential traffic congestion are also worsening the problem.

Ned Kneadler, president of the Arizona Mortgage Bankers Association, said even when buyers find affordable land, building is slow because of the backlog created by so much demand.

"Now there is a six- to eight-month build time for houses with a price range of $80,000 to $100,000," said Mr. Kneadler, who owns Peoples Mortgage in Scottsdale. "Even schools are not adequate to handle the people coming in because of the newly constructed homes. People can't get their kids enrolled in the school in their neighborhood because they are too full, and that is causing some heartburn."

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