It's the best time to shop for a first home since 1978, according to a national Realtors' index based on interest rates and home prices. But even so, many would-be buyers continue to find their dream out of reach.

"It's a great time to buy - if you can afford it," says Harley Rouda, president of the National Association of Realtors.Despite lower mortgage rates and lower prices, the real measure of affordability depends on those three ancient real estate standards: location, location and location.

The National Association of Realtors calculates a nationwide affordability index for first-time buyers based on family income, the average price of a "starter" home and the average rate on a 90 percent mortgage.

The index stood at 81.5 for the final quarter of 1990, the best rating in 12 years. It meant that a "typical" first-time buyer had 81.5 percent of the income needed to finance the "typical" starter home.

The index assumes a family income of $24,428 and measures its ability to afford a $77,900 home with a 30-year fixed mortgage at 9.92 percent. That home price is down from $81,500 at the beginning of 1990, while mortgages fell from 10.04 percent.

But finding a house for $77,900 isn't easy in many places. The median price for new homes in January was $121,800.

The index also assumes a buyer has saved a down payment of 10 percent plus closing costs.

To help first-time buyers, the National Association of Realtors is urging Congress to allow penalty-free withdrawals from Individual Retirement Accounts for down payments.

Even with Realtors and builders trying to provide incentives, many prospective buyers have been discouraged by the state of the economy.

That was reflected in sales of new homes, which plunged in January to the lowest monthly level since 1982.