To understand today's report, we have to first understand how the index determines if a home is affordable or not. To be deemed affordable, an average American family with a median $64,000 annual income must be able to buy the home without having to apply more than 28% of their income towards housing costs.

While falling home prices is obviously the main catalyst to the sharp jump in affordability, it is not the only component that has made homes more affordable. We also have to consider interest rates. Interest rates play a vital role in how much we are paying for our properties, and as interest rates have fallen in the first quarter, more and more homes are now considered to be affordable for the average American family.

During the first quarter, the average 30 year fixed mortgage average under 5%, which has helped many potential home buyers take the step to home ownership.

Also helping give first time home buyers the chance to purchase their first home is an $8,000 federal tax credit that the government is giving to first time home buyers.

Not every part of the country was so fortunate though. We tend to think of places like New York being tough markets for home buyers, and this held true in the first quarter. During the three months, only 21% of all homes sold in New York were considered to be affordable. Indianapolis, however, was on the other end of the spectrum, boasting an affordability ranking of just slightly under 95%.

While the increase in affordability is a welcome sign that the housing market may be close to stabilizing, we still have a long way to go before things work themselves out. We still have a huge inventories of new and used homes on the market that have to be dealt with before the housing market as a whole can rebound. It is estimated that the market currently has about a ten month supply of homes for sale, leading a lot of home owners to reach the decision to rent instead of selling their homes.

It is great to see home prices fall, but just because prices are coming down does not mean that we are going to see a massive increase in home buying. The major underlying factor that we have to consider here is unemployment. People are still losing a lot of jobs, and those who still have employment are living under constant fear that they could be next to receive the dreaded news that they no longer have employment.

Unemployment is currently running at over 9%, and there is no reason to assume that it will not pass through 10% before the end of the summer.

When will the housing market rebound? That is the million dollar question, and while things are starting to look a little better than they were a few months ago, there is still a long way to go before we can officially claim that the housing fiasco has come to an end.

What are your thoughts on the real estate market? Is now a good time to buy your next home, or should we wait a bit longer and look for prices to fall even more in the months to come?