Housing affordability conditions for all buyers reached a milestone in the first quarter, according to the National Association of Realtors (NAR).
NAR's composite quarterly Housing Affordability Index rose to a record high of 205.9 in the first quarter, based on the relationship between median home price, median family income and average mortgage interest rate. This is the first time the quarterly index broke the 200 mark since NAR began record keeping in 1970.
Furthermore, NAR's index shows the median income family, earning just under $61,000, could afford a home costing $325,500 in the first quarter, which is more than double the national median existing single-family home price of $158,100. The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5% of gross income.
A companion NAR index measuring the ability of first-time buyers to purchase a home also set a record, with the first-time buyer index reaching 135.8 in the first quarter.
‘For those with good credit, we've never seen better housing affordability conditions or market opportunities than we see at present,’ says NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami. ‘Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means. This is especially true for self-employed buyers.’