Falling prices and mortgage rates combined with rising incomes in August to improve the typical American family's ability to buy a home, a real estate trade group said Monday.

But the National Association of Realtors said the improvement was curtailed by the Persian Gulf crisis and weakness in the overall economy.The Realtors said its housing affordability index rose from 102.4 in July to 105.6 in August. That meant a family with a median income of $34,467 had 105.6 percent of the income needed to buy a median-priced existing home costing $97,000.

The median means half of the families earn more and half earn less, or that half of the houses sell for more and half for less.

"Declining interest rates in early August, which brought borderline buyers into the market, had the biggest positive impact on the index reading last month," said Realtors President Norman D. Flynn. "However, the decline was short-lived due to the Middle East conflict and resulting United States military build-up in the Persian Gulf."

Flynn said that while the problems with the economy were not rooted in the Persian Gulf crisis, the Aug. 2 Iraqi invasion of Kuwait has "greatly increased the chances for a recession."

"Due to increasing oil prices, we expect rates to increase during most of the fourth quarter, pushing the housing affordability index down," Flynn said. "However, we don't expect the index to go much below the 100 mark."

The interest rate used to calculate the index declined from 10.15 percent in July to 9.98 percent in August but has returned to double-digits. The rate is a composite of fixed-rate and adjustable-rate mortgages as reported by the Federal Housing Finance Board.

The median price for a house fell $1,800 from $98,300 in July, while the median income rose $109 from $34,358 the previous month.

The changes resulted in a $19 decrease, to $680, in monthly mortgage payments including principal and interest.

The August median income exceeded the $32,633 needed to qualify for a median-priced home. A family earning the median actually would qualify to buy a home priced at $102,400 using conventional financing covering 80 percent of the cost.

Under August's affordability conditions, a family earning $20,000 would have sufficient income to qualify for a $59,500 home using a $47,600 loan. A family earning $30,000 would qualify for an $89,300 home with a $71,400 loan.