Realtor group reports housing affordability rose in September
By Kathleen M. Howley
Bloomberg News Service
WASHINGTON U.S. housing affordability rose in September to the highest level in almost a year as mortgage rates fell, according to a report by the National Association of Realtors.
The group's Housing Affordability Index rose to 139.7 from 134.2 in August, the highest since November 2001, when it was at 149.
A reading of 100 means a family with the national median income makes exactly enough to pay for a median-priced home. Higher readings reflect greater affordability, said Lawrence Yun, an economist with the Washington-based trade group.
The housing affordability report suggested the housing boom may continue to lift the U.S. economy, even as government reports show unemployment rose in October and manufacturing weakened. The Realtors group forecasts a record 5.47 million homes will be sold this year.
"Homes will continue to appreciate," said Frank Nothaft, chief economist at Freddie Mac, the No. 2 mortgage buyer, in a conference call with investors hosted by Morgan Stanley. "Price growth will decelerate from the levels we've seen in the last two or three years, but it's not going to crash."
The 30-year fixed mortgage rate fell to a 37-year low in October and averaged 6.09 percent during September, according to Freddie Mac. That's down from 6.81 percent a year earlier. Each half-point drop represents 1.5 million Americans who qualify to buy a home, Yun said.
The median home price fell to $159,000 in September from $163,000 in August. It rose 2.6 percent in the third quarter, the slowest such increase in three years. Median household income rose 0.5 percent to $52,689 from $52,429 in the previous quarter, Yun said.
In September, U.S. home resales rose 1.9 percent to an annual pace of 5.4 million units.
The rate for a 30-year fixed mortgage will average 6.5 percent this year and 7 percent next year, according to the Mortgage Bankers Association of America.