What is the Housing Affordability Index and why is it important?
Source: Housing Affordability Index | Michael Storey | LinkedIn
The NATIONAL ASSOCIATION OF REALTORS® affordability index measures whether or not a typical family could qualify for a mortgage loan on a typical home. A typical home is defined as the national median-priced, existing single-family home as calculated by the National Association of 
Realtors.
It’s important because the components in measuring the index are used to determine if the median income family can qualify for a mortgage on a typical home.
Some notes:
- Housing affordability declined slightly (2.6 percent), from a year ago in November in spite of a notable increase in prices. The median sales price for a single family home sold in November in the US was $221,600, up 6.6 percent from a year ago. This pushed the affordability index from 171.9 to 167.4.
- Growing incomes and easing mortgage rates from a year ago helped to nearly offset the increase in home prices. Nationally, mortgage rates were down 15 basis points from one year ago (one percentage point equals 100 basis points) while incomes rose 2 percent. The reduction in mortgage rates from one year ago saves the median home buyer $16 per month on principal and interest payments at the current home price while income growth means the median family earns $111 more per month than November 2014.
