Buying a Home Easier, but Not for First-Timers

A typical American family’s ability to buy a median-priced home improved in November, but many first-time home buyers still were unable to afford starter-type houses, a trade group said Tuesday.

The National Assn. of Realtors reported that its housing affordability index rose to 105.8 in November, meaning that a family with a median income of $33,482 had 105.8% of the income needed to buy a median-priced existing home costing $93,000.

The index was the highest since February, when it registered 106.7. It was 105.5 in October.

The median means that half the families earn more and half less, or that half of the homes sell for more and half for less.

The increase in the November index was attributed to declining mortgage interest rates and an increase in the median family income to $33,482 in November from $33,365 in October, the realtors said.

The association uses a composite rate reflecting both fixed-rate and adjustable-rate mortgages. By its calculation, rates fell to 10.12% in November from 10.16% in October.

The changes increased the monthly principal and interest payment on a median home by $1 to $660 in November, which represents 23.6% of the median family’s income.

The group’s president, Norman D. Flynn, said the drop in rates generally is having the most effect on middle-income buyers.

“We continue to see buyers taking advantage of favorable financing,” Flynn said. “The drop in rates generally is having the most impact in areas where housing is affordable for moderate-income buyers.”

But the realtors group’s chief economist, John A. Tuccillo, noted that many first-time buyers have insufficient income to make the transition from renter to homeowner.

The association’s third-quarter index for first-time home buyers showed that on a national basis they had only 71% of the income needed to buy a typical starter home.