While record low mortgage rates have aided the recovery of the housing market, overly tight lending restrictions have held back further buying activity.
According to the National Association of Realtors' analysis of government data, the median household income for a homebuyer using conventional financing has increased each year since 2004, but the median household income for families has remained stagnant since 2007.
Between 2004 and 2011, the median income for a homebuyer jumped from $79,000 to $90,000, while median household income has been around $50,000 for the past five years.
NAR research economist Scholastica Cororaton wrote that this could be happening for two reasons: more loan applicants with higher income and/or banks have become overly tight with their lending.
Federal Reserve chairman Ben Bernanke agrees with the latter as he said in a recent speech that lending standards have become too tight and need to let up a bit to aid the economic and housing recovery.
According to NAR analysis, if underwriting requirements returned to normal, home sales would jump 10 to 15 percent, while 300,000 new jobs would be added to the economy.