An index measuring the ability of the typical American family to buy a home made its sharpest drop in 15 years last month, as rising mortgage rates and home prices resulted in a loss of purchasing power, a real estate trade group reports.
The National Association of Realtors said its affordability index was at 105 in February, down 5.1 index points from a revised 110.1 in January. It was the biggest month-to-month decline since the measure dropped 5.2 index points from 137 to 131.8 in January 1974.February's index level meant that a family earning the median income of $32,314 annually had 5 percent more income than needed to qualify for a mortgage covering 80 percent of the purchase price of a medium-priced home.
The median price for an existing home in February was $93,100, meaning half the homes sold for more and half for less. February's median price was up $3,400 from January.
The mortgage rate used to calculate the index rose to 9.77 percent in February from 9.61 percent, representing a composite of fixed and adjustable rates.