By Les Christie, CNNMoney.com staff writer
Last Updated: August 19, 2009: 2:19 PM ET
NEW YORK (CNNMoney.com) — Homes continue to be more affordable than they have been in nearly two decades.
The typical American family, making the nation’s median income of $64,000 a year, could afford to buy 72.3% of all homes sold in the United States during the second quarter, according a quarterly report from the National Association of Home Builders (NAHB) and Wells Fargo.
That’s off just a tad from the record 72.5% reached during the first three months of 2009, but up substantially from the second quarter of 2008 when only 55% of homes sold were affordable.
“The increase in affordability — along with the $8,000 federal tax credit for home buyers — is stimulating demand, particularly among young, first-time buyers,” said NAHB Chairman Joe Robson, a homebuilder from Tulsa, Okla., in a prepared statement.
The NAHB judges a home to be affordable if a family making the metro area’s median income could devote no more than 28% of their take-home pay toward housing costs.
The vast improvement this year is due to plunging prices and rock-bottom interest rates. The average U.S. home price has dropped more than 32% from its peak, which was set during the summer of 2006, according to the S&P/Case-Shiller Home Price index. And, for most of the three months mortgage rates were historically low, under 5% for a 30-year fixed-rate loan.