Although the average cost of a home is rising, family income is also up, leading to improved housing affordability in the fourth quarter, according to the NAR. The nation's typical household had 139.2 percent of the income needed to purchase a home at the fourth quarter median existing-home price of $171,600. David Lereah, the NAR's chief economist, said the easing in housing affordability was more than the expected seasonal decline in home prices that is usually seen in the winter months.
Affordability for first-time home buyers also improved, the NAR found. A first-time buyer household with an income of $30,436 had 79.9 percent of the income needed to purchase a starter home at a price of $145, 900. But the NAHB notes that in many parts of the country, home prices have escalated well beyond the range of many average-income households. Demand for homes, especially as investments, is driving prices up. The Fannie Mae Foundation warns that by 2007, a household earning the median income will not be able to qualify for a mortgage for a median-priced U.S. home.
In a recent report, “Housing Facts, Figures & Trends 2004” the NAHB found that the median and average prices of both new and existing homes more than doubled in the past two decades of the 20th century.
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