Composite housing affordability index in the U.S. 2000-2021

The composite Housing Affordability Index value in the United States fell sharply to 148.1 percent in the last quarter of 2021–the lowest value since 2018. Although the index value declined, it remained above the historical norm of 128.

Key factors that drive real estate market

Three main factors can affect the power of house-buying consumers: income, house prices, and mortgage rates. When incomes increase, consumer power also increases. The median household income in the United States has exceeded 60,000 U.S. dollars for five consecutive years since 2016, some of the highest incomes recorded in recent years. When mortgage rates or house prices rise, housing affordability reduces. The sales price of existing single-family homes in the United States has increased year-on-year since 2011 and reached 363.8 U.S. dollars in 2021.

What does the Housing Affordability Index mean?

The Housing Affordability Index uses data provided by the National Association of Realtors (NAR). It measures whether or not a family earning the national median income is able to afford the monthly mortgage payments on a median-priced existing single-family home. An index value of 100 means that a family has exactly enough income to qualify for a mortgage on a home. The higher the index value, the more affordable a house is to a family.