Housing Affordability Index: Key Insights

The Housing Affordability Index (HAI) is a critical metric used to assess the affordability of housing in a given market. It calculates the percentage of a family’s income that is required to qualify for a mortgage on a median-priced home. A higher HAI indicates greater affordability, while a lower HAI signifies challenges in the housing market.

• Median Home Price: The current median price of homes in a specific area, which is a significant determinant of housing affordability.
• Median Family Income: This represents the typical income of families in the area, providing a benchmark for evaluating whether housing costs are manageable.
• Mortgage Interest Rates: Current rates affect monthly payments and overall housing costs, influencing the HAI significantly.

As of April 2025, the National Association of Realtors reported the HAI at 101.0, a decline of 2.3% from the previous month, yet still 12.3% above its low of 89.9 recorded in October 2023. Notably, the HAI is 43.6% below its peak of 179.2 in April 2020, reflecting ongoing affordability challenges due to rising prices and interest rates (Haver Analytics).

• Rising Home Prices: The median price of existing single-family homes rose to $418,000, up 2.6% from the previous month (Haver Analytics).
• Increasing Mortgage Rates: Rates climbed to 6.81%, exacerbating affordability issues. This is a stark contrast to the low of 2.73% in December 2020 and a peak of 7.70% in October 2023 (Haver Analytics).
• Income Growth: Median family income has improved, but not at the same rate as housing costs, leading to a decrease in the affordability index (U.S. Housing Affordability).

In 2023, 31% of Bay Area residents spent more than 35% of their income on housing. In contrast, about 49% of homeowners managed to spend less than 20% of their income on housing costs (SF Bay Area Vital Signs). Such statistics illustrate the regional disparity in housing affordability, influenced by local economic conditions and housing supply.

• Idaho: The state has seen a burgeoning housing market, yet affordability remains a significant concern as both rents and home prices have surged. The increasing share of multi-family housing permits reflects an attempt to mitigate these challenges (Idaho’s Housing Market Trends).
• National Trends: Nationwide, the affordability crisis is characterized by rising costs in construction materials and labor, which further complicate new home development and maintenance (John Burns Research and Consulting).

Economic conditions such as inflation, employment rates, and consumer confidence significantly impact the HAI. The Federal Reserve’s decisions regarding interest rates also play a crucial role, as seen in recent months. As of June 2025, the Fed has maintained interest rates, leading to a stabilized yet cautious market environment (Investopedia).

• Forecasting Trends: Analysts expect continued fluctuations in the HAI as economic conditions evolve. The Burns Affordability Index provides forecasts for various metropolitan areas, indicating potential shifts in market dynamics (John Burns Research and Consulting).

Leading economists emphasize the importance of addressing housing supply issues to improve affordability. Investments in infrastructure and housing development are seen as necessary steps to alleviate the crisis. According to industry experts, fostering partnerships between public and private sectors may prove beneficial in creating more affordable housing options.

• Market Research: Potential homebuyers should stay informed about local market conditions and interest rates.
• Financial Planning: It is crucial to have a clear understanding of personal finances and the total cost of homeownership, including maintenance and property taxes.

The Housing Affordability Index serves as a vital tool for understanding housing market dynamics. As affordability continues to decline due to rising prices and interest rates, stakeholders must prioritize innovative solutions to ensure sustainable access to housing. By combining insights from economic trends, regional variations, and expert opinions, we can better navigate the complexities of the housing market.

For the latest updates on housing trends and affordability metrics, resources such as the Federal Reserve Economic Data (FRED) and industry reports from credible organizations are invaluable.