Housing Affordability Hits a 6-Year High, Realtors Say

An index measuring a typical family’s ability to buy a home climbed to its highest level in more than six years, a real estate trade group said Monday.

The National Assn. of Realtors said its housing affordability index jumped to 94.8% in August, the highest level since April, 1979.

That meant that a family earning the median income of $27,438 annually had 94.8% of the income needed to qualify for a mortgage on a typical house selling for $77,100.

The improvement in the August index, which was up a sharp 1.8 percentage points from July, came from further declines in mortgage interest rates and a $300 decline in the median price of an existing single-family home.

The declines in home prices and interest rates brought the monthly mortgage payment down to $603 in August from $612 in July, the association said.

“Recent improvements in the index, especially last month’s rise, clearly illustrate the positive impact of lower interest rates,” said David D. Roberts, president of the association.

Roberts said the average effective mortgage rate for loans on existing homes dipped to 11.33% in August, the lowest level since October, 1979.

The affordability index has not been at 100, the point where the median family’s income would be enough to qualify for a median-priced home, since December, 1978, when mortgage interest rates ranged from 10% to 11%.