The National Association of Realtors reported that during all of last year its Housing Affordability Composite Index declined to 166.2, the lowest level since 2008. For December, the index improved somewhat to 167.8 but remained down 1.6% from December 2013. The Affordability Index was at its peak of 212.5 in January 2013 when average mortgage interest rates were at their low of 3.47%.

The decline in affordability last year reflected a rise in the average mortgage rate to 4.30% but then it fell back by December to 4.16%. The median sales price increased 5.8% for the full year to $207,208 on top of an 11.5% rise in 2013. The latest price of $210,200 was up 6.3% y/y but down from the June peak of 223,000, due to seasonal pressures. Median family income rose during December to $65,897, up 1.5% y/y. For the full year, income rose 2.0% to $65,321. Higher rates combined with improved home prices to raise the monthly mortgage payment to 15.1% of income for all of last year, up from 12.6% in 2012.

The Housing Affordability Index equals 100 when median family income qualifies for an 80% mortgage on a median priced existing single-family home. A rising index indicates more buyers can afford to enter the home-buying market. Data on Home Affordability can be found in Haver's REALTOR database. Interest rate data can be found in the WEEKLY and DAILY databases.