Housing Affordability Rises to 2-Year High

The typical American family’s ability to buy an existing home increased in October to its highest level in more than two years, a real estate trade group said Monday.

But despite falling home prices, lower mortgage interest rates and rising family incomes, existing home sales fell 4.7% in October, according to the National Assn. of Realtors.

The realtors group said its housing affordability index rose to 113.4 in October from 110.8 the previous month. That meant a family with a median income of $35,353 had 113.4% of the income needed to qualify for conventional financing to buy a median-priced home costing $92,800.

The median is the point at which half of the families earned more and half earned less, and half of the homes cost more and half less. The median income rose $114 in October while the median price fell $1,600. The monthly mortgage payment for the median-priced home decreased $14 to $649.

The index was at its highest point since it reached 113.5 in September, 1988.

In the Northeast, a family earning the median income of $41,376 had 90.1% of the income needed to buy a median-priced home costing $136,200. In the West, a family with a median income of $37,631 had 80.8% of the income needed to buy a median-priced home costing $140,600.

Families generally had more income than necessary to buy homes in the Midwest and South, where housing typically is lower-priced.