housing affordability index

housing affordability index

Developed by the National Association of REALTORS® to track the financial ability of consumers to buy homes.Many state organizations publish similar indices for their local markets.The benchmark is 100,sometimes expressed as 1.0.It means that a family earning the median income has exactly enough money to qualify for a mortgage to buy a median-priced home in that market.It assumes a 20 percent down payment,and that mortgage payments will not exceed 25 percent of income.A figure less than 100,or less than 1.0,means that the median income family cannot afford the median house. A greater figure means the median income family can afford a home more expensive than the median home.When a trend line is declining,it indicates that housing is becoming less affordable. Upwardly trending numbers mean housing is becoming more affordable. National figures may be obtained by going to the National Association of REALTORS® Web site, www.realtor.org, and clicking on Research, then Housing Statistics, and then Housing Affordability Index.