Industry News

U.S. real estate affordability drops

First-time buyers could afford $119,700 home in third quarter

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General housing affordability conditions fell during the third quarter, a result of higher home prices, but remained favorable, according to the National Association of Realtors. NAR's composite Housing Affordability Index was 128.6 during the third quarter of 2004, down 3.7 percentage points from 132.3 in the second quarter; it was 7.6 points below the same period a year earlier when it stood at 136.2. David Lereah, NAR's chief economist, said current market conditions are keeping the door to home ownership open. "Any index reading over 100 is considered sufficient for the nation as a whole and we remain in pretty good shape," he said. The index measures affordability factors for all home buyers making a 20 percent down payment, with an index of 100 defined as the point where a median-income family has the exact amount of income needed to purchase a median-priced existing home. The third-quarter median family income was projected to be $54,761. The index shows the nation's typica...