NAR's composite Housing Affordability Index for the Oct. through Dec. 2000 was 132.9, up 8.2% from 124.7 reported in the third quarter. That score is 1.8 points below the same period a year earlier when it stood at 134.7.
These numbers show that half the nation's households had at least 132.9% of the income needed to purchase a home at the fourth quarter median existing-home price, which was $139,400. This index measures affordability factors based on home buyers making a 20% down-payment, with an index of 100 defined as the point where a median-income family has the exact amount of income needed to purchase a median-priced existing home. The fourth-quarter median family income was $51,282.
This upswing shows that housing affordability is moving in the right direction, NAR president Richard A. Mendenhall is reported as saying. In light of the economic slowdown, this level of affordability should keep the housing market moving.
Figures from the Federal Housing Finance Board show that the average effective mortgage interest rate for existing homes was 7.81% during the fourth quarter and is down from 8.10% in the third, the NAR report says. It was 7.66% in the fourth quarter of 1999. A median income family that could afford a homecosting $185,300, which is well above the national median price of $139,400 in the fourth quarter. Affordability for first-time home buyers rose 4.6% in the fourth quarter to 78.3. It was 1.6 points below the fourth quarter 1999 index of 79.9.
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