Housing affordability index drops in Q2
August 3, 2005
According to the National Association of Realtors, housing affordability in the United States dropped in the second quarter.
The industry group’s housing affordability index dropped to 120.8 in the second quarter, down from 133.2 in the first quarter and sharply down from the second quarter of last year when the index stood at 132.3. The index measures the ability of a family of median income to purchase a median-priced home.
Additionally, the first-time buyer index stood at 70.1 percent in the second quarter, down from 76.8 percent in the first quarter and from 77.1 in the second quarter last year. This lower purchasing power, however, did not seem to dissuade people from buying homes.
Last week the NAR said that sales of existing homes was at a seasonally adjusted pace of 7.33 million in June even while prices jumped by 14.7 percent, the largest price rise since 1980.
Additionally, the US Department of Commerce said that new home purchases were up 4 percent in June, an annual pace of 1.374 million.