NEW YORK (AP) _ The term ''affordable housing'' is one of those phrases with a definition that becomes fuzzier rather than clearer with use, and its use is growing all the time.

Almost every literate American has the opportunity to read or hear about it every day, generally in a negative context, such as ''a lack of affordable housing.''

Because of that, it is associated, at least in a political sense, with crisis, emergency, poverty, tragedy, deprivation and other unpleasant situations.

Sometimes it does refer to a tragic condition, but perhaps more often it refers to an index produced by housing or real estate interests who understandably would like to see every American financially qualified to buy.

The big factors in any of these affordability indexes are current prices, prevailing interest rates and family income. When prices or interest rates rise, down goes affordability. If wages fall, so does affordability.

But not every American family wants to buy - some prefer renting - nor do all buyers seek a median-priced house rather than one less expensive. Moreover, not every buyer needs a conventional mortgage; better ones are available.

Extremely important but not included in some indexes is the fact that many homebuyers are not in the market for the first time. Many of them have owned before and have been able to amass equity sufficient for large down payments.

In addition, many potential homebuyers live in areas of the country where single-family home prices are below the national median, or incomes are above it. They might qualify, therefore, even when indexes are terrible.

When affordability indexes fall, therefore, it is not of necessity a national tragedy calling for emergency grants or political action.

As used by the National Association of Realtors, the index matches household median income against income needed to obtain a conventional loan equal to 80 percent of the price of a median-priced single-family home.

In June, the affordability index fell below 100, which is a level indicating that national median income equals the amount needed to qualify for a home at the national median price. It was the first time below 100 since March 1986.

The specific reading for June was 99.3, which meant that a family earning the median income of $32,760 had 99.3 percent of the income needed to qualify for conventional financing covering 80 percent of a home priced at $93,200.

What the index for August will be cannot be determined yet. While interest rates seem likely to fall, thus improving affordability, prices conceivably could rise enough to offset the effect of lower interest rates.

But, while affordability indexes have value in monitoring the direction of the economy, and even greater value in assessing the future of homebuilding and real estate activity, they have very limited value to individual families.

Most families with realistic approaches to buying recognize the need to be flexible. They understand that if they cannot afford a certain house they might have to step down to something less desirable. And they do.

Very little attention is paid to sweat equity by any of the affordability measurements, even though this technique is used every day. For those with skills and a willingness to work, there is no dearth of affordable housing.

A common fix-up situation involves the transition of former summer cottage communities built years ago just beyond the suburbs of large and growing cities. Eventually, the cities overran these once-vacation communities.

Smart buyers spotted opportunity at low prices. They built foundations under them, improved them, insulated them, installed heating systems, updated the plumbing and eventually added rooms. It happened all over America.

Some buyers didn't go to the bank for financing. Instead of conventional mortgages they got financing from the sellers. The sellers were growing older; they needed income, and they were willing to give terms better than the bank.

''Housing affordability'' is an ambiguous term. It has value as an economic indicator, but it can mislead if it is used to suggest a national crisis, as it sometimes is, because it fails to take American ingenuity into account.

End Adv AMs Wednesday, Aug. 9