Industry News

Housing affordability improves in fourth quarter

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Declining mortgage interest rates and rising family income improved housing affordability conditions in the fourth quarter, the National Association of Realtors reported today. NAR's composite Housing Affordability Index was 131.8 during the fourth quarter of 2004, up 2.9 percentage points from 128.9 reported in the third quarter. The index was 5 points below the same period a year earlier when it stood at 136.8. The index shows the nation's typical household had 131.8 percent of the income needed to purchase a home at the fourth quarter median existing-home price, which was $187,500. This 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 fourth-quarter median family income was projected to be $55,239. David Lereah, NAR's chief economist, said the improvement in housing affordabilit...