Inman

NAR Housing Affordability Index hits 42-year high in January

The National Association of Realtors’ (NAR) Housing Affordability Index reached a record high this January, at 206.1. January 2012 is the first month since the index’s inception in 1970 that the index has hit or passed 200, the group announced this week.

The index, calculated monthly by NAR, is built from the relationship among three data points: median home price, median family income, and average mortgage interest rate. The higher the index score, the greater the affordability.

The index aims to measure the affordability of a median-priced, existing single-family home by a median-income-earning family. An index of 100 represents a family’s ability to exactly afford such a home, with a 20 percent down payment and mortgage payments at 25 percent of the family’s gross income.

Late 2011 saw a steady monthly rise in the index from June’s 172.4, the 2011 low, to 197.9 in December 2011. The index has risen from 169.4 in 2009 to 174 in 2010, and to 184.5 in 2011.