📘 What is the Housing Affordability Index?

The Housing Affordability Index (HAI) measures whether a typical family earns enough income to qualify for a mortgage on a median-priced home. It’s published by the National Association of Realtors (NAR) and updated regularly to reflect market trends.

An index value of 100 means the average household has exactly enough income to buy a median-priced home with a standard mortgage.

📌 When and Why It’s Used

The Housing Affordability Index is used by investors, economists, and policymakers to assess how accessible homeownership is for average buyers in a specific market. A higher index suggests housing is more affordable, while a lower index indicates a tightening market.

For real estate investors, it’s a useful tool to understand local demand pressure, potential rental demand, and overall market health.

🧮 How It’s Calculated or Applied

The index compares median household income to the income needed to qualify for a mortgage on a median-priced home under prevailing interest rates. A score above 100 means the median income exceeds the threshold; below 100 means it falls short.

Key inputs include median home prices, interest rates, property taxes, insurance, and assumed down payment percentages.

Investors can use HAI to track trends across cities or regions, identifying where buyers may shift to renting due to affordability gaps.

✅ Pros

• Clear signal of how affordable homeownership is for the average household
• Helps investors assess market conditions and potential rental demand
• Useful for comparing affordability across different regions

⚠️ Cons

• Does not account for credit score or other lending qualifications
• Based on broad averages, which can miss neighborhood-level trends
• Sensitive to interest rate changes, which may skew short-term readings