HispanicBusiness

According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged a record low 3.36 percent in the fourth quarter, down from 3.54 percent in the third quarter and 4.01 percent in the fourth quarter of 2011.

NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said favorable affordability conditions dominate the landscape. "In reality, home prices over-corrected on the downside and homes in most of the country were selling for less than replacement construction costs, which means they were undervalued," he said. "At the same time we've had record low mortgage interest rates and slow but steady improvements in median family income. Combined, these factors boosted housing affordability conditions to the highest on record in 2012."

NAR's national annual Housing Affordability Index, with breakouts for metropolitan areas, rose to a record high 193.5 in 2012 from 186.4 in 2011. The index is calculated on the relationship between median home price, median family income and average effective mortgage interest rate. The higher the index, the stronger 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 downpayment and 25 percent of gross income devoted to mortgage principal and interest payments. For first-time buyers making small downpayments, the affordability levels are relatively lower.

"The housing affordability index shows that the national median income of families was almost double the income needed to buy a median-priced home in 2012, so most buyers are able to stay well within their means," Yun said. "Even with rising home prices, conditions are expected to stay very favorable with the index averaging 161 in 2013, which would be the third best on record."

Metro areas with the greatest housing affordability conditions in 2012 include the Detroit-Warren-Livonia area of Michigan, with an index of 571.1; Decatur, Ill., at 419.5; and Lansing-East Lansing, Mich., at 397.0. There were 145 out of 156 metros that set records for housing affordability in 2012.

In the condo sector, metro area condominium and cooperative prices -- covering changes in 56 metro areas -- showed the national median existing-condo price was $179,900 in the fourth quarter, up 12.2 percent from the fourth quarter of 2011. Forty-seven metros showed increases in their median condo price from a year ago, one was unchanged and eight areas had declines.

Regionally, existing-home sales in the Northeast increased 2.2 percent in the fourth quarter and are 12.9 percent above the fourth quarter of 2011. The median existing single-family home price in the Northeast rose 0.7 percent to $228,400 in the fourth quarter from a year ago.

In the Midwest, existing-home sales rose 5.6 percent in the fourth quarter and are 18.3 percent higher than a year ago. The median existing single-family home price in the Midwest increased 9.2 percent to $143,800 in the fourth quarter from the same quarter in 2011.