The National Association of Realtor's Pending Home Sales Index took another nosedive in January, falling 7.7% to 80.4 from a downwardly revised reading of 87.1 in December. The PHSI is 6.4% below January 2008 and is at the lowest level since tracking began in 2001, when its benchmark value was set at 100.

The PHSI in the Northeast dropped 12.7% to 57.8 in January, 19.7% below a year ago. The Midwest fell 9.2% to 72.6, 13.8% below January 2008. The South declined 11.9% to 82.2, 9.1% below a year ago. The West was up 2.4% to 103.6 and is 13.5% higher than January 2008.

The NAR, however, also announced Tuesday that its Housing Affordability Index rose 13.6 percentage points in January to 166.8, a new record high. The HAI, based on consistent values and assumptions over time, shows that the relationship among home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.

The HAI indicates a median-income family, earning $59,800, could afford a home costing $283,400 in January with a 20% downpayment, assuming 25% of gross income is devoted to mortgage principal and interest. A year ago, the typical family could afford a home costing $263,300.

"Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales," said Lawrence Yun, NAR chief economist. "We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions and from the $8,000 first-time buyer tax credit."

Yun added, "I am hopeful that sales will turn around by late spring and early summer because history suggests that home sales can rise even in times of job losses when housing affordability rises."