Housing Affordability Falls For Second Straight Month Due to Rising Home Prices in Feb. and Mar.

The National Association of Realtors released its monthly Housing Affordability Index today, showing that the index fell in March to 166.7 from 174.4 in February, and from 176.9 in January (historical high), but is still 43 points above the 123.7 index average since 1989 (see chart above).

Housing affordability is determined by three variables: mortgage rates, median family income and median home prices. For the first three months of 2009, both mortgage rates (5.16% average) and median family income ($61,185 average) have held fairly steady, but the median home price has increased in each of the last two months from $164,200 in January to $167,900 in February (2.25% increase) and $174,900 in March (4.2% increase).

This two consecutive month increase in median home prices follows seven straight months of price declines (July 2008 through January 2009), suggesting that the national housing market may have reached a bottom in early 2009?