Housing Affordability Index: Surprise, It's a Buyer's Market

by: Mark J. Perry

The National Association of Realtors released its latest report today on the Housing Affordability Index [HAI] for April, showing a slight decline to 129.4 from the March level of 130 (see chart below) due to a slight increase in median-price home in April.

A composite HAI of 129.4 means that a family earning the median family income in April ($60,185) had 129.4%% of the income necessary to qualify for a conventional loan (at 6.03%) covering 80% of a median-priced existing single-family home in April ($200,700).

Since July 2007 when the HAI was at only 103.6 (due to higher home prices and interest rates, $228,500 and 6.8% respectively), the 25.8 point increase in housing affordabilty to 129.4 in April should continue to play an important role in the recovery process for the slumping real estate market. It's a buyer's market.