In addition to affordable average mortgage records and public property records showing appreciated values nationwide, the second month of 2013 saw positive developments in housing affordability. According to the National Association of Realtors' latest Home Affordability Index, February saw affordability logged at a near-record level as consumer confidence continued to move upward. The month's index reading was supposedly the highest noted since January 1971.
Affordability was seen improving in all regions on an annual basis, except in the West, which has been struggling to post positive figures amid climbing demand, falling supply levels and quickly increasing home prices. The region did, however, reportedly record month-over-month gains between January and February.
The organization of real estate professionals reported no change in affordability was seen in the Midwestern region during the month, while both the Northeast and South exhibited slight declines. Median-income families earning more than double the amount needed to buy a median-priced house have led to a sustained the high level of affordability in the Midwest and South.
While affordability has held relatively firm in recent months, a small decrease was exhibited on a year-over-year basis, reportedly due to the fact that double-digit gains home price gains were not completely offset by lowered mortgage rates and heightened income levels.
Consumer confidence levels moved upward in March
As positive changes in housing affordability were seen in numerous areas of the country in past months, consumers may have been beginning to feel more confident in their finances and the overall economy. The most recent Thomson Reuters/University of Michigan Surveys of Consumers noted individuals were making more money and becoming financially stable at an increasing rate last month, as the Sentiment Index for March ticked up to 78.6. This improvement was notable on both a monthly and yearly basis, as sentiment registered at 77.6 in February, and 76.2 in March 2012.
Richard Curtin, chief economist for Surveys of Consumers, said the recent gains in consumer confidence is largely due to two factors. He credited individuals ignoring government warnings regarding possible economic downturn because of federal spending cuts, as well as expectations that gains in the labor market will tick up in the following months, as reasons for the boost.
"Although confidence dipped in early March, since the middle of the month consumers have expressed improved prospects for economic growth," Curtin said. "This is not the first time that optimism increased following the Great Recession, but the recent gains stand a better chance to be sustained and ultimately lead to a lower unemployment rate and support consumer spending increases in the year ahead."