Housing Affordability Index (HAI Index)

What is the Housing Affordability index?

The Housing Affordability Index (HAI) is published monthly by the National Association of Realtors (NAR).

It measures the relationship between median priced home, median family income and mortgage rates to determine if a median income family can qualify for a mortgage on a median priced home.

The calculation assumes a down payment of 20 percent and it assumes a qualifying ratio of 25 percent. Simply said, it tracks whether housing is becoming more or less affordable for the typical household.

How to interpret this index?

A value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. A HAI of 115.0 means a family earning the median family income has 115% of the income necessary to qualify for a conventional mortgage on a median-priced home.

Basically, an increase in the Housing Affordability Index shows a median income family is more able to afford the median priced home. Also a higher index number indicates that more households can afford to purchase a home.

The HAI has reached an all time high in the first quarter of 2009 at 173, meaning a median income family has 173% of the income necessary to qualify for a conventional mortgage on a median priced home. The 3 variables for this index being the US median income, median home price and interest rates. Median home prices have corrected to the lowest in years and the interest rates have made historical lows, thus explaining the HAI explosion in 2009.

Historical data from Realtor.org

Cathy Chaudemanche
Realtor Associate/Keller Williams RealtyMetuchen, NJ
Servicing Home Buyers and Sellers in Middlesex County, NJ
http://www.yourhousefast.com/