Buying a home has reached its most affordable level in more than two decades.

Nearly 78% of homes sold during the first quarter were affordable to those earning the national median income of $65,000, according to a report released Thursday by the National Association of Home Builders and Wells Fargo.

The reason: Home prices nationwide are off about 36% from their peak. Median income has risen by about 10%. And mortgage rates are below 4%.

There is one catch for home buyers, however: Mortgage availability.

"Homes in this year's first quarter were more affordable than they have been at any time in more than 20 years, yet many potential sales are not happening," said Barry Rutenberg, NAHB's chairman and a homebuilder in Gainesville, Fla. He said that's mainly due to overly tight lending conditions.

"Without this significant hurdle, the housing and economic recovery could be proceeding at a much stronger pace," he said.

Most and least affordable markets: Among large metro areas, Indianapolis was America's most affordable housing market with 96% of all homes sold easily afforded by the typical family, according to the report.

Wages in Indianapolis are reasonably high with the median family income at $66,900, nearly $2,000 above the national median. Meanwhile, the median price for homes sold there during the first three months of 2012 was a mere $102,000.

Other major markets that topped the most affordable list included Dayton, Ohio, where 94% of homes sold were considered comfortably affordable; Lakeland, Fla., with a 93% affordability score and Modesto, Calif. at 93%.

Decidedly unaffordable was New York, where only 31% of homes sold were affordable to median income families, who earned $69,200. The median home price in the metro area was $400,000.

Other least affordable large markets included San Francisco (40%), Honolulu (48%), and Los Angeles (50%).

In smaller markets, Cumberland, Md. topped even Indianapolis with 99% of homes sold affordable to median income families in the area. Homes sold for a median of $80,000 there, with local families typically earning about $53,000.

The least affordable small market was Ocean City, N.J., with an index rating of 46% for families earning the median income of $71,100. Other expensive housing markets in this category included Santa Cruz, Calif., San Luis Obispo, Calif., Santa Barbara, Calif. and  Laredo, Texas. 

NEW YORK (CNNMoney)