What does the affordability index measure?

The affordability index measures the percentage of families who can afford to buy an average home within a specific area. This index takes into account various factors, including the average home price, household income levels, and prevailing mortgage interest rates. A higher percentage indicates that a larger portion of families can afford homeownership, suggesting a more accessible housing market. Conversely, a lower percentage would imply that housing is less affordable for many families, highlighting economic strain in that area.

This measure is particularly useful for understanding trends in housing accessibility and can guide policymakers, real estate professionals, and potential homebuyers in making informed decisions related to real estate markets. It provides essential insights into the overall health and dynamics of the real estate environment, focusing primarily on the intersection of income levels and housing costs.