The National Association of Realtors� (NAR) released its assessment of 2004 home sales on Tuesday. Sales reached a record high for the fourth consecutive year.

The report tallied a total of 6,675,000 sales of existing homes for the year, up 9.4 percent from 2003. While December sales slipped 3.3 percent (on an annualized basis) from the previous month, that might have been expected as November 2004 tied with June, 2004 as the highest sales months in the 37 years NAR has been tracking the data.

Even with the slight decline, December 2004 was 5 percent higher than December of the previous year and set the sixth highest monthly pace on record.

David Lereah, NAR�s chief economist said that the housing market shows ��no sign of a downturn. Home sales will continue at historically high levels, and 2005 is expected to be the second-best year on record for the housing market.�

Sales of existing single-family homes totaled 5,566,000 in 2002 and 6,100,000 in 2003.

The South had by far the largest number of home sale transactions for the year, 2,709,000 compared with 2,436,000 in 2003. December sales were down 4.2 percent from the previous month but still were 8 percent higher than December 2003. Housing sales in the West for the year were 1,850,000, nearly 200,000 more than the year before, and Midwest sales were up 60,000 to 1,382,000. Sales in the Northeast totaled 734,000, 42,000 more than 2003.

2.18 million houses were available for sale nationwide at the end of December. This represents a 3.9 month supply at current sales rates. This inventory was down 11.7 percent since the end of November.

The median single family home price for the entire year was $184,100, an increase of 8.3 percent from 2003, but the December median price for the nation was $188,900, which indicates a continued strong price appreciation. Regional medians for the year and the percent (change) from 2003 were as follows: Midwest; $152,000 (+7.1 percent); Northeast $214,800 (+8.6 percent); West, $281,200 (+11.9 percent); South $173,000 (+8.3 percent.)

In a NAR report issued earlier in the month, Leheah said that he expected sales in 2005 to decline by 2.5 percent from the year just passed. This would mean total sales of 6.48 million, but if this figure holds up, 2005 still be the second highest sales year on record.

The Wall Street Journal, however, recently brought a different perspective to such rosy sales figures. In an article titled �The Nation�s Least-Affordable Housing Markets� the Journal quoted a study by, a consulting and forecasting firm, that, in 30 of the nation�s metropolitan areas (out of 325 studied,) housing prices are so high that someone earning the median income can�t qualify for a median priced home if they must adhere to traditional lending standards.

For example, first on the unaffordable index is Salinas, California. There the median income would qualify to buy 49 percent of the median single family home. This is 11 percent less of a home than a median income could have purchased one year earlier. In San Jose a median wage-earner can afford 65 percent of the median house, down 5 percent since last year, while a Boston buck will almost buy a whole house � 97 percent, unchanged from a year ago.

Of the 30 metro areas studied, 20 were in California and three in Florida, but home buyers in Las Vegas, Nevada may face the scariest prospects in future years. While the median wage earner could still afford 91 percent of a home in the exploding area housing market, that was 42 percent less than he could have bought a year ago.

Six of the ten most affordable housing markets in the United States were in New York State. In the most affordable, Elmira, New York, a median income is sufficient to qualify for 334 percent of the price of a median home. Two metro areas in Indiana, South Bend and Fort Wayne had affordability indexes of 297 percent and 286 percent respectively.

Nationally the study indicates that a median income is sufficient to qualify for 129% of the median home. That figure is supported by the National Association of Realtor�s Affordability Index which stood at 131.7 percent in November. The latter index assumes a 20 percent down payment and a 30 year fixed-rate mortgage.

The Journal also quoted a study by the National Association of Home Builders and Wells Fargo Housing Opportunity Index that suggests just over half of the homes sold nationally during the third quarter of 2004 were affordable to families earning at the median income level. This is down from about 61 percent at the end of the first quarter of last year.

That these studies are being done in an era when mortgage rates are still at near record lows makes one wonder how long middle income earners will continue to be able to afford the American Dream.