Wednesday, March 18, 2009

Housing Affordability Index at a Record High

The National Association of Realtors’ Housing Affordability Index has risen 13.6 percentage points to 166.8, a new record high (December 2008: 153.2 to January 2009: 166.8). A value of 100 means that a family with the country’s median income has exactly enough income to qualify for a mortgage on a median-priced existing single family home. The higher the index, the more income buyer's are making relative to home prices (and the better housing affordability is for the buyer).

The reading shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970. “History suggests that home sales can rise even in times of job losses when housing affordability rises,” said Lawrence Yun, the association’s chief economist. (Source: The Enterprise March 16-22, 2009)

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