Record Housing Affordability Index for 2012

2012 will clearly go down as a record year for favorable housing affordability conditions and a great year for buyers. According to the National Association of REALTORS® national Housing Affordability Index stood at 198.2 in November, With 11 months of data reported.  This is up from 186 in 2011, which was the previous record. The Housing Affordability Index is based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power; recordkeeping began in 1970. An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent down payment and 25 percent of gross income devoted to mortgage principal and interest payments. Rising home prices and a gradual uptrend in mortgage interest rates will offset improvements in family income, but 2013 likely will be the third best on record in terms of household buying power. A window of opportunity remains open for buyers who can qualify for a mortgage.