U.S. housing affordability rose to the highest level in three decades during the first quarter, helped by a drop in mortgage rates, according to the National Assn. of Realtors.
The group’s housing affordability index rose to 144 during the first three months of the year, from 140.3 in the previous quarter. The index is at its highest level since 1973, when it reached 147.9.
The current reading means that a family with the national median income makes 44% more than needed to buy a median-priced home, which was $161,500 in the first quarter.
Falling mortgage rates have given buyers the ability to pay more for homes even as prices rise, because their borrowing costs are less. Every drop of 1 percentage point in rates means 250,000 more Americans will buy a home, helping to support the economy as unemployment rises, the Realtors group said.