U.S. Housing Most Affordable Since March '77
WASHINGTON - Continued declines in mortgage rates and home prices made U.S. homes more affordable in October and pushed the National Association of Realtors' housing affordability index to its highest level in nearly 15 years.
The trade group's index, which tracks home buying ability, was 118.8 in October, up from a revised September index of 116.3. The figure is the highest since March 1977, when it was 120.7.
118% of Income for Mortgage
A family earning the national median annual income of $36,473 had 118.8% of the income needed to qualify for a conventional mortgage covering 80% of a median priced home.
The interest rate used to compute the index was 9.02% in October, down from 9.17% in September. The rate is the lowest since July 1977, when it was also 9.02%.
The Realtors' association said October's median family income was up $112 from September's $36,361 and up $1,310 from October 1990.
The national median home price dropped to $99,200 in October, $500 less than in September. The figure reflects a rise of $6,300 from October 1990.
Referring to the increase in existing home sales and housing starts last month, John Tuccillo, chief economist of the National Association of Realtors, said: "Signs of life appeared last month in the housing sector, and we expect these to grow."
Region by Region
On a regional basis, a family in the Midwest earning the regional median income had 158.9% of the income needed in October to buy a median-priced $76,800 home.
In the Northeast, the typical family had only 94.8% of the income needed to buy a $136,700 median-priced home. In the South, the index stood at 121.1% for an $88,200 home, and in the West the index was 82.8% of the income for a $147,600 median-priced home.