Housing affordability index

A housing affordability index measures whether a typical household in a given market can afford to buy or rent a typical home, condensing home prices, incomes, and financing costs into a single number that can be tracked over time or compared across regions.

Methodologies vary by publisher, but a common approach compares the monthly mortgage payment on a median-priced home, at prevailing interest rates and a standard down payment, to median household income; an index value of 100 typically means a household earning the median income has exactly enough income to qualify for that mortgage, with values above 100 indicating greater affordability. This differs from rent burden, which measures affordability only for renters by looking at the share of income actually spent on rent, rather than a hypothetical mortgage on a median home.

Analysts use these indices alongside the house price index and median household income to judge whether a local market is becoming more or less accessible to typical buyers, and low readings often coincide with rising vacancy rate pressure or displacement concerns. A key pitfall is that "typical" home and "median" income figures can mask sharp differences within a market — an index can look healthy at the metro level while specific neighborhoods remain unaffordable to local incomes.