New and existing home sales increased year-over-year in December, while home prices continued to plummet, hitting levels of affordability not experienced since 1971, the Obama administration said Monday.

In its December Housing Scorecard report, the administration said median-income families on average had double the funds needed to cover the cost of a home, but purchase demand remained relatively malaise as home prices continued to drop.

The report reflects data from the U.S. Department of Housing and Urban Development and the Treasury.

The Obama Administration said in the heat of the 2006 home price bubble, the average family could barely afford to buy a home.

Since then, affordability has greatly improved after 33-consecutive months of home price declines.

Citing sources from HUD and the Mortgage Bankers Association, the administration said 12.5 million homeowners have been able to refinance their mortgages in the past two years.

In addition, fewer homeowners fell into foreclosure during the month of November, while foreclosures declined year-over-year due to delays in processing on the lenders’ part.

The increase in home sales is linked to low mortgage rates, with the average, 30-year, fixed-rate mortgage hitting 3.95%, down from 4.86% a year earlier.

In the last quarter, 2.58 million existing homes were on the sales block, down from 3.15 million a year earlier. New home sales dropped from 196,000 in 2010 to 158,000 in the most recent quarter.

The number of underwater borrowers remained relatively unchanged with 10.723 million borrows underwater in the most recent period, compared to 10.78  million a year earlier.

Write to Kerri Panchuk.