The National Association of REALTORS®‘ home price affordability index dropped below a long-term trend line, once again igniting fears of a housing bubble. But some experts say the worries are being blown out of proportion.

The latest reading of the index, which reflects July data, marked the lowest level of home affordability since July 2009 and the fourth month that the index has come in below trend. The index measures the household income needed to qualify for a traditional mortgage for a median-priced single-family home.

Higher mortgage rates and home prices are causing affordability to drop. Home prices have surged 13.4 percent compared to a year ago, and mortgage rates are at their highest averages since February 2012. Wages are rising — but not as fast as home prices.

The West has posted some of the biggest drops in affordability, as home prices have climbed 18.4 percent in the region in the last year.

NAR’s affordability index peaked in January at 210.7, and it has been falling ever since. It now stands at 157.8. An index reading above 100 indicates that median income is higher than needed to qualify for a mortgage. “A score of 157.8 officially indicates that a household earning the median income has 57.8 percent more income than needed to get a mortgage on a median-priced home,” CNBC reports.

But a recent paper by three economists from Robert Morris University in Pennsylvania suggests that when the index falls below trend for at least three months, it may be an indication of the beginning of a housing bubble. The economists point to the beginning of 2004, when home affordability fell below its long-term trend. Some say that marked the beginning of the last housing bubble. Housing affordability stayed below the long-term trend until December 2008, the economists note.

Housing affordability this year dropped below the long-term trend in April and has stayed there through July, CNBC reports. But even signs of a housing bubble don’t mean home prices are doomed to crash, analysts say.

NAR experts write at the Economists’ Outlook blog that housing affordability likely could strengthen in the coming months “as prices have decreased from a month ago and most likely reached their seasonal peak for the year. Even with rates increasing, certain metro areas have healthy inventory levels, and consumers can still look to purchase before those historically low rates are a thing of the past.”

Source:  “Latest Housing Affordability Data,” NAR’s Economists’ Outlook Blog (Sept. 6, 2013) and “Yep, it’s another housing bubble,” CNBC (Sept. 10, 2013)