Rising prices and mortgage rates continued to undermine the purchasing power of first-time home buyers in the second quarter despite increased incomes, the National Association of Realtors reported last week.

The NAR said that a prolonged conflict in the Middle East will drive up mortgage rates even further, adversely affecting not only the entry-level sector, but also the entire housing market.

The NAR said its first-time home buyer affordable-cost index was 72.9 in the April-June period, meaning a typical renter family with wage earners 25 to 44 years old had 72.9 percent of the income needed to qualify for financing to buy a typical starter home.

The index measured 73 during the previous quarter. The Realtors' composite index measuring the affordability of all buyers of existing homes was 104 during the second quarter, down from 104.3 from January through March.

The median income of a first-time home buyer rose $245 to $23,368 in the second quarter. The median income means half of the buyers earn more, half less.

However, the typical first-time buyer would need an income of $32,061 -- $8,693 higher than the median income -- to qualify for conventional financing covering 90 percent of a home priced at $81,800, the median starter-home price. The Realtors said a first-time buyer would qualify to buy a $59,600 home. Baltimore is waiting for a state decision on money it is owed from Maryland's use of waterfront areas.

The state hopes to decide by the end of next month how much money, if any, it will pay Baltimore in "back taxes" on waterfront property controlled by the Maryland Port Administration.

The city and the state agreed in principle to payments in lieu of taxes covering several waterfront tracts. The port agency's legal department has determined that the state owes the city at least $1.3 million.

But officials said most of those agreements, dating back 12 years, never have been formally put into effect.

State Transportation Secretary Richard Trainor said he hopes the state will be ready to make an offer to the city by the end of September. He said the state already pays the city about $2 million a year for fire protection for port facilities.

The state agency also provides its own security for the docks.

"We want to be fair," he said. The state will take a look at how much it already pays the city and what it receives in return before proposing a settlement.

Trainor, pointing out that the state has the power to decide unilaterally just how much it will pay, said the city will get the chance to argue against the state's proposal.

Henry Bogdan, the city official responsible for relations with the General Assembly, said that he hopes the state will be guided by criteria governing payment in lieu of taxes that the Transportation Department has provided to the legislature before.

Although those guidelines may be a couple of years old, they could serve as a "starting point" for discussions, he said.

Owen C. Cardwell Jr. has been named the first president and executive director of the Virginia Housing Foundation Inc., a nonprofit organization established last year to promote affordable housing initiatives.

Cardwell, a Lynchburg native, has been deputy director of housing policy in the Department of Planning and Community Development in Lawrence, Mass., since April 1988.

Cardwell, an ordained Baptist minister, has a bachelor's degree in religious studies from Virginia Theological Seminary.

He also has a master's degree in management from Cambridge College in Massachusetts and a master's in theological studies from Boston University.

-- Compiled from staff reports and news services