Realtors Say Homes Have Become More Affordable

Homes became more affordable to the typical American family last month thanks to declining mortgage rates and only modest increases in prices, the National Assn. of Realtors said Tuesday.

The association’s housing affordability index rose 0.8 point to 101 in January, meaning that a family with the median annual income of $28,054 had $275 more than was required to qualify to buy a home for $77,000. The typical family could have afforded a home priced at $77,700.

Fifty-two percent of the existing homes sold in January were purchased at or below the price that a typical family could afford to pay, the association said.

When the index is at 100, the average family has exactly enough money to qualify for financing for an average-priced home. The computations assume that buyers make a 20% down payment, the standard requirement for a home mortgage.

Last month, the index hit 100.2, the first time it was above 100 in eight years.

Walter Maloney, a spokesman for the association, said the average home became more affordable because of “the drop in mortgage rates coupled with generally modest increases in home prices through much of the nation.”

The average home mortgage rate dropped from 11.12% in December to 10.83% in January, he said.