Increases in home prices and mortgage interest rates cut into homebuyers' purchasing power in January, the National Association of Realtors reports.

The Realtors' Housing Affordability Index for January was 108, down from 111.2 in December. At 108, the index means that a family earning the January median income of $32,207 had 108 percent of the income needed to qualify for a conventional loan covering 80 percent of a home priced at $91,500, the median price the association recorded for existing single-family homes in January.The drop from December was the largest month-to-month drop in the index since January 1988, when price and interest rate increases caused a similar decline in housing affordability.

The January 1989 median price was $2,800 higher than the previous month's median, and the interest rate used to calculate the index rose slightly, from 9.59 percent to 9.61 percent.