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NAR'S HOUSING AFFORDABILITY INDEX REMAINS HEALTHY

 NAR'S HOUSING AFFORDABILITY INDEX REMAINS HEALTHY
 WASHINGTON, Jan. 31 /PRNewswire/ -- Although the National


Association of Realtors' Housing Affordability Index inched downward in December, purchasing power for the typical home buyer remained at one of the highest levels in more than 15 years.
 The index, which measures the ability of a family earning the median income to purchase a median-priced resale home, was 124.2 in December, down from the revised November index of 124.4. Last month's index improved by more than 8 points from the December 1990 index of 116.0.
 "While an increase in the median home price in December caused a slight decline in the index last month, the reading still conveys that we are experiencing the best affordability conditions in many years," said NAR President Dorcas T. Helfant.
 The December index shows that a family earning the national median income of $36,696 in December had 124.2 percent of the income needed to qualify for conventional financing covering 80 percent of a home priced at $100,000, the median existing-home price for that month. The median is the midpoint, meaning half the existing single- family homes sold in December for more than the median price and half sold for less. Similarly, half the families in the United States earn more than the median income and half earn less.
 Helfant said the association is optimistic about the 1992 outlook for the existing-home sales market due to the excellent affordability conditions. "Sales of existing homes made a modest recovery last month, showing that buyers have begun to respond to the lowest rates since the mid-1970s," she said. "However, the weak increase in the resale market during the fourth quarter demonstrates that low interest rates have just barely started taking effect," Helfant added.
 The Housing Affordability Index calculated for the four regions of the country had mixed readings during December. The index for the Northeast and Midwest increased from November to December, but the index declined in the South and West, noted NAR Chief Economist John A. Tuccillo.
 In the Northeast, a family earning the median income, had 97.4 percent of income needed to buy the median priced home in that region in December. In November, the index for the Northeast was 95.0.
 The Midwest region showed the best home buying conditions of all the regions during December. A family earning the median income in that region had 162.0 percent of the income needed to purchase the median-priced home there last month. In November, the index for the Midwest was 158.5.
 In the South, the typical family still had ample means to purchase the median-priced home last month, even with the monthly index decline. The index was 123.1 in December, down from 124.4 the previous month.
 In the West, the typical borrower's purchasing power stood at 89.1 in December. In November, the index for the West was 89.6.
 It's just a matter of time before the low interest rates kick in and begin to stimulate housing markets across the country, Tuccillo noted. "We just need to be patient -- consumer confidence will eventually be restored," he said.
 The interest rate used to compute NAR's Housing Affordability Index, which is a composite of closing rates for both fixed-rate mortgages and adjustable-rate mortgages on existing homes, as reported by the Federal Housing Finance Board, declined to 8.51 percent in December from 8.69 in November.
 When calculated with the board's effective fixed-rate mortgage interest rate of 8.80 percent for December, the index was 120.9. When calculated with the effective adjustable-rate mortgage interest rate of 7.67 percent for December the index was 134.4.
 The median home price increased $2,100, from $97,900 to $100,000 between December and November; the median family income rose $112, from $36,584 to $36,696; and the income needed to qualify for a loan covering 80 percent of the typical home increased $139, from $29,414 to $29,553. Also, the monthly mortgage payment increased $3 to $616 in December.
 When NAR's affordability index measures 100.0, the median family income equals exactly the amount needed to qualify to purchase a median-priced home, using conventional financing and making a 20 percent down payment. Because the national median income in December exceeded the qualifying income, a family earning the median income could purchase a home priced at $124,200, $24,200 higher than the median price for December.
 Under December's affordability conditions, a family earning $20,000 would have sufficient income to qualify for a $67,800 home using a $54,200 loan. A family earning $30,000 would qualify for an $101,600 home with a $81,300 loan. A family earning $40,000 would have sufficient income to qualify for a $135,500 home with a $108,400 loan; and a family with a $50,000 income would qualify for a $169,400 home using a $135,500 loan.
 The National Association of Realtors, "The Voice for Real Estate," is the nation's largest trade association, representing more than 750,000 members involved in all aspects of the real estate industry.
 -0- 1/31/92
 /CONTACT: Lois Clinton, 202-383-1016, or Cheryl Spector, 202-383-1289, both of the National Association of Realtors/ CO: National Association of Realtors ST: District of Columbia IN: SU:


DC -- DC004 -- 5490 01/31/92 09:05 EST
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Date:Jan 31, 1992
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