While the overall economy sputtered during the first quarter, the housing market continued to show remarkable resiliency.
The most recent indication: A widely watched measurement of housing affordability made its best showing in two years, according to the National Association of Realtors.
The association's Housing Affordability Index was 142.9 during the first quarter, up 9.5 percentage points from 133.4 reported in the fourth quarter and 12.1 points higher than the same period a year earlier when it stood at 130.8.
The current index is the highest reading since the first quarter of 1999 when it registered 143.3.
What does this index mean? It shows that half the nation's households had at least 142.9 percent of the income needed to purchase a home at the first quarter median existing-home price, which was $139,700.
The index measures affordability factors for all home buyers making a 20 percent downpayment, with an index of 100 defined as the point where a median-income family has the exact amount of income needed to purchase a median-priced existing home. That median family income during the first quarter was $52,055.
David Lereah, the Realtor association's chief economist, said rising family income and lower mortgage interest rates more than offset higher home prices. "These conditions are pushing home sales close to historic highs, and are a major contributing factor in keeping the overall economy out of recession," he said.
NAR President Richard Mendenhall said that without adjusting for inflation, the actual price a typical family could afford has never been higher.
Affordability for first-time buyers also improved, the association found, with the first-time home buyer affordability index rising 5.1 percentage points in the first quarter to 83.8 -- the equivalent of nearly an $11,000 increase in buying power, Mendenhall said. The median starter home price during the first quarter was $118,700.
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