Mortgage Monday: Affordability Driving Home Sales

Affordability Driving Home Sales

Home affordability is one aspect of the housing market that is improving across the country. The market does not have the benefit of the home buyer tax credits, but thanks to sustained economic growth and the recovering job market, there is now a historically high affordability index.

Historically hight affordability is one of the key drivers of an improved sales performance. NAR’s (National Association of Realtors) affordability index is at its highest level ever, at nearly 170, which means households earning the national median income have 170 percent of the income needed to buy a home at the national median price.

Backing up the affordability index are low interest rates. Today the interest rate is below 5 percent. Home prices remain quite a bit below their peak during the housing boom. A high number of distressed properties is the main reason housing prices remain at the current low value.

Put it all together and you have a scenario that means that now is the time to buy that home you always wanted. With low prices, low interest rates and the affordability index rising, what more could you be waiting for?

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