Right now could be the best time to buy a home - if you qualify. Prices are close to 10-year lows in most markets, and rates for 30-year fixed mortgages are at their cheapest ever.

Mortgage buyer Freddie Mac says the average rate on a 30-year loan fell to 3.78 percent, the lowest since long-term mortgages began in the 1950s.

The average for 15-year fixed mortgage, a popular option for refinancing, held steady at 3.04 percent, matching the record low hit last week.

Lower rates are a key reason the housing industry is showing early signs of a recovery five years after the bubble burst and the market collapsed.

Last month's sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence, breaking ground on more homes and requesting more permits to build single-family homes later this year.

A modest improvement in the job market has also made more people open to buying a home. Employers have added 1 million jobs in the past five months.

But total home sales are still well below normal. Economists say it could be years before the market is fully healed.

One big reason is banks that were burned by the 2008 financial crisis are now much more conservative about lending money to prospective home buyers.

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

-The Associated Press also contributed to this report

Richard Davies Business Correspondent ABC NEWS Radio twitter.com/daviesabc