Affordability Index on Homes at 18-Year High : Housing: Rising incomes and falling mortgage rates cited by trade group as key factors, but California still trails the nation on recovery.

The ability of a typical American family to buy a home rose in the fourth quarter to its highest level in 18 1/2 years, boosted by rising incomes and falling mortgage rates, a real estate trade group said Friday.

The National Assn. of Realtors said its housing affordability index was 129.6 in the October-December period, up from 120.2 a year earlier and the highest since it measured 127.8 in the April-June quarter of 1974.

The affordability index for California also rose, but the state remains one of the most expensive places to live in the United States. The California Assn. of Realtors said earlier this week that its index now stands at 30%, compared to 25% in 1991.

“We’re glad that our affordability index has improved from a year ago, but the sad truth is that only one in three families in California can afford to buy the state’s median-priced home,” said Walt McDonald, a Riverside broker and president of the California Assn. of Realtors.

McDonald used Friday’s report by the national trade group to reiterate his association’s support for two bills that were recently introduced in the state Legislature.

The proposals, primarily designed to help would-be buyers in Los Angeles County and other high-priced urban areas, would create a state-sponsored program that would allow Californians to purchase homes with down payments as low as 3%.

Both of the realty trade group’s indexes measure the ability of a family earning the median income to purchase a median-priced home with a 20% down payment.

Nationally, half of the families across the country earned 129.6% of the $28,418 in income needed to buy the country’s median-priced home of $103,400, assuming they made a 20% down payment.

But the picture in the West is much bleaker. Only 30% of all households in California earn the $56,060 needed to purchase the state’s median-priced homes, which cost $197,900.

In a separate report, the Federal Home Loan Mortgage Corp. said Friday that the average rate on 30-year, fixed-rates mortgage has dropped to its lowest level in nearly 20 years.

The agency, known as Freddie Mac, said the average 30-year rate dropped to 7.75% in the week ended Sept. 11 from 7.80% the week before. It was the ninth decline in 10 weeks and pushed rates to their lowest level since the 7.73% average posted in June, 1973.

Most analysts expect mortgage rates to remain in the 7.5% to 8% range over the next few months, particularly if inflation remains contained. The government reported Friday that wholesale prices rose 0.2% in January.