Home purchasing power strong for first quarter

Low mortgage rates and a higher median family income maintained the strong home purchasing power of the typical American family in this year's first quarter, according to a news release from the National Association of Realtors.

NAR's composite housing affordability index for the first quarter was 138.2, the same level recorded during the fourth quarter of 1998.

The index is 1.8 percentage points higher than the same quarter a year ago when it was 136.4. The first-quarter measurement shows that half of the nation's households had at least 138.2 percent of the income needed to purchase a home at the first-quarter median price for a single-family home, which was $131,200.

This means that a family earning the median income of $46,086 could afford a home costing $181,300.

NAR President Sharon Millett said the affordability index remained steady in the first quarter, despite a slight increase in mortgage interest rates.

The average effective mortgage interest rate rose to 6.95 percent in the first quarter from 6.88 percent in the fourth quarter.

However, "Interest rates below 7 percent, combined with other strong economic factors of the past year, should keep housing affordability very strong throughout 1999," Millett said.

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