Housing affordability set new record in 2012

January 16th, 2013

Record home affordability is expected to continue in 2013.

More Americans were able to afford a home in 2012 than any previous year due to prime mortgage conditions, and 2013 is shaping up to be a good year for buyers as well.

The National Association of Realtors’ latestHousing Affordability Index stood at 198.2 in November. The higher the index is, the greater a household’s purchasing power, and readings of 100 indicate that a average median-income buyer has the exact amount of income to qualify for the purchase of a median-priced single-family home. Many buyers took advantage of this scenario in 2012, and mortgage service companies are confident that these trends will continue this year.

“Rising home prices and a gradual uptrend in mortgage interest rates will offset improvements in family income, but 2013 will be the third best on record in terms of household buying power,” said Lawrence Yun, chief economist for the organization. “A window of opportunity remains open for buyers who can qualify for a mortgage.”

The index is projected to hover around 160 in 2013, and affordability will vary greatly based on location. For example, purchasing power is expected to remain highest in the Midwest, as home prices remain moderate and the job market is consistent. However, the study notes that even in the Western region of the country, where home prices are usually higher, many households will average median-incomes may be able to get more for their money.