THE ECONOMY : Americans’ Ability to Buy Houses Slips in 2nd Quarter

The ability of the typical American family to buy an existing home slipped from April through June because of an increase in home values.

The National Assn. of Realtors said Monday that its housing affordability index measured 124.8 in the second quarter, down from 125.5 from January through March and 127.2 a year earlier.

Edmund G. Woods Jr., the realty group president, said home price appreciation in the three months ended June 30 offset drops in mortgage rates, resulting in a slight loss in purchasing power.

The group had attributed the decline in its first-quarter index, from 126.9, to higher interest rates.

The association said 30-year, fixed-rate mortgages averaged 7.98% in the second quarter, down from 8.12% in the January-March period. They averaged 7.82% in the final three months of 1994.

When the index measures 100, a family earning the median income has exactly the amount needed to purchase a median-priced existing home, using conventional financing and a 20% down payment.

The median is the midpoint, meaning half the families earned more and half earned less, or that half the homes cost more and half cost less.

Thus, in the second quarter, half the families in the nation had at least 124.8% of the income needed to qualify for the purchase of a home at the national median price of $111,000. In fact, the typical family, with a median income of $38,951, could afford a home costing $138,300.

The real estate group said its first-time home buyer index also fell during the second quarter, to 80.9 from 81.5 in the first quarter and 82.4 a year earlier. The first-time-buyer index measures the ability of a renter family with wage earners between 25 and 44 to qualify for a mortgage on a starter home.

Thus, the typical first-time buyer had only 80.9% of the income needed to purchase a typical starter home costing $94,400.

The first-time index shows that the qualifying income needed for conventional financing covering 90% of the starter home price was $30,580. Yet the median income of first-time buyers was $24,735--a difference of $5,845.