The association's composite Housing Affordability Index was 143.4 during the second quarter, down 0.7 percentage points from a 30-year high of 144.1 reported in the first quarter; it was 11.8 points higher than the same period a year earlier, when it stood at 131.6. The previous high was an index of 147.9 recorded in 1973.

David Lereah, National Association of Realtors chief economist, said low interest rates have been the biggest factor in favorable housing-affordability conditions. "Historically, low mortgage interest rates largely offset higher home prices, keeping housing affordability close to a three-decade high," he said. "With a recent rise in interest rates, the Housing Affordability Index can be expected to slide but remain very favorable."

The index shows the typical household had 143.3 percent of the income needed to purchase a home at the second-quarter median existing-home price, which was $168,900. This index measures affordability factors for all home buyers making a 20-percent down payment, with an index of 100 defined as the point where a median-income family has the exact amount of income needed to purchase a median-priced existing home. The second-quarter median family income was estimated at $53,285.

National Association of Realtors President Cathy Whatley said that even though the index reading edged down, the typical family could afford a more expensive home than in the first quarter. "A household earning the median income could afford a home costing $242,200 in the second quarter, which is well above the median price in most markets across the country," she said. "Although the ability to buy a higher-priced median home slipped, the drop in interest rates translated into nearly $10,000 worth of additional buying power."

According to the Federal Housing Finance Board, the average effective mortgage interest rate for existing homes was a record-low 5.58 percent during the second quarter, down from 5.90 percent in the first quarter; it was 6.82 percent in the second quarter of 2002.

Affordability for first-time home buyers slipped 0.7 percentage points in the second quarter to an index of 82.7, but was 5.8 percentage points above the second quarter 2002 index of 76.9.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.