"People" can't afford houses. They don't buy "a house", they buy "a payment".
And they can't even afford that, which is why they are re-fi'ing. Like I said, they re-fi at a higher amount and get cash out.
The other side of the coin is those who can actually buy a house, those who are older and downsizing, and who sell one property to buy another, and pocket the difference. One set of people gets real money while the other gets a payment.
"General index of housing market conditions"? As far as I can tell that link goes to only existing home sales. Ridiculous to look at that as a single factor.
Other things: you know who's buying houses? 3 kinds: 1) genuine homeowners, 2) speculators because the interest rates are so insanely low, and 3) those with money who are building a RE portfolio, and who own multiple properties due to either insanely low rates, or capital looking for a place to go.
In my experience, the relative population of (1) is dwindling in favor of (2) and (3). And even at that, your linked article mentions only existing home sales, not new home starts. Many in (1) are already in the market, just trading up because rates are so low, while replacement homes at the lowest end of the market are being picked up by speculators and RE portfolio'ists.
DJIA at 17.6k today, kind of a meh figure on a meh day.