What Is Housing Affordability Index?
The HAI is a macro indicator that directly impacts rental demand. When the index drops below 100, the typical American family cannot afford the typical home, which pushes more households into renting. In early 2024, the HAI sat around 93–98—meaning median-income families fell short of qualifying for median-priced homes. For context, the index averaged 140–160 during the 2010s when rates were 3.5–4.5% and home prices hadn't yet surged. The index hit an all-time low of 91.7 in October 2023 when 30-year rates peaked near 7.8%. As a rental investor, a low HAI is a demand signal: more potential homebuyers stay in the rental pool, supporting occupancy rates and rent growth. A high HAI (above 150) means buying is easy and renters convert to homeowners, thinning your tenant base.
The Housing Affordability Index (HAI), published monthly by the National Association of Realtors, measures whether a family earning the median income can qualify for a mortgage on the median-priced existing home—an index of 100 means they barely qualify.
At a Glance
- Publisher: National Association of Realtors (NAR), monthly
- Baseline: 100 = median family earns exactly enough to qualify for a median-priced home
- Current range (2024): 93–98 (historically unaffordable)
- Historical average (2010–2019): 140–160
- All-time low: 91.7 (October 2023)
- Key inputs: Median home price, median family income, prevailing 30-year mortgage rate
How It Works
The formula. NAR calculates the HAI using three inputs: the national median existing-home sale price, the median family income, and the effective 30-year fixed mortgage rate. The index represents the ratio of median family income to the income needed to qualify for an 80% LTV mortgage (20% down) on the median-priced home, with monthly payments not exceeding 25% of gross income. An index of 120 means the median family earns 120% of the qualifying income—a 20% cushion. An index of 90 means the family earns only 90% of what's needed—they're priced out.
What drives changes. Three variables move the needle. Home prices have the most inertia—the national median rose from $226,800 in 2019 to $389,800 in 2024, a 72% increase. Mortgage rates are the most volatile—jumping from 3.0% in late 2021 to 7.8% in October 2023 nearly doubled the monthly payment on the same home. Income growth helps but can't keep pace: median family income rose from $78,500 to $98,200 over the same period (25%), far short of the 72% price increase. When home prices rise 6% and rates jump 100 basis points in the same year, the HAI can drop 15–20 points in 12 months.
Regional variations. The national HAI masks extreme local differences. In 2024, the HAI in Des Moines, Iowa sat around 175—homes are affordable for most families. In San Jose, California, it was 38—the median family earns barely a third of what's needed for the median home ($1.45 million). Markets with an HAI below 80 are permanently renter-heavy: San Francisco (52), Los Angeles (47), New York metro (61), and Miami (68). Rental investors should monitor their specific MSA's affordability index, not the national figure.
The rental demand connection. When affordability deteriorates, the homeownership rate drops and the renter pool expands. From 2004 to 2016, the U.S. homeownership rate fell from 69.2% to 63.4%—a shift of 7.5 million households from owning to renting. Each percentage point drop in homeownership adds roughly 1.3 million renter households. This structural demand supports occupancy and rent growth in markets where the HAI stays below 100. Conversely, when rates dropped to 2.7% in 2021 and the HAI spiked above 160, renters flooded into homeownership, thinning the tenant pool and slowing rent growth in affordable metros.
Real-World Example
Jamal's market selection in 2024. Jamal was choosing between two markets for his next multifamily acquisition: Austin, Texas and Raleigh, North Carolina. He pulled both metro-level HAI figures.
Austin's HAI had dropped from 128 in 2020 to 76 in 2024. The median home price rose from $345,000 to $520,000, and mortgage rates hit 7.0%. A family earning Austin's median income of $95,000 needed $118,000 to qualify for the median home. Result: thousands of would-be buyers staying in rentals. Austin's renter population grew by 8.2% from 2021 to 2024, apartment occupancy held at 93%, and rents stabilized at $1,650 for a 2BR after a brief dip in 2023.
Raleigh's HAI sat at 112—still affordable for the median family. The median home price was $410,000, but median family income ran higher at $104,000. Raleigh's homeownership rate was rising as first-time buyers took advantage of relative affordability. Apartment occupancy softened to 90%, and landlords offered 1–2 months free on new leases.
Jamal chose Austin. The low HAI signaled persistent rental demand that would support occupancy even if new supply came online. He acquired a 24-unit building at a 6.8% cap rate, and within 12 months, occupancy held at 95% while Raleigh properties in his peer group averaged 89%. The affordability index didn't guarantee success, but it correctly predicted which market would have stronger tenant demand.
Pros & Cons
- Quantifies the macro environment for housing demand in a single, trackable number
- Predicts shifts between the renter and homeowner pools before they show up in vacancy data
- Available at national and metro level for market-to-market comparison
- Published monthly by NAR with consistent methodology since 1981
- Helps time market entry—low HAI periods produce the strongest rental demand
- National figure masks wide regional disparities—always use metro-level data
- Assumes 20% down payment, which overstates affordability (many buyers put 3–5% down)
- Based on median existing-home prices only—excludes new construction, condos, and entry-level product
- Lags real-time conditions because of closing and data reporting delays (60–90 days)
- Doesn't account for housing supply constraints (zoning, permitting) that affect prices independently
Watch Out
- A low HAI doesn't guarantee rent growth. If your market also has 15,000 new apartments under construction (Austin, Nashville, Phoenix in 2023–2024), the rental demand from poor affordability collides with massive new supply. Track permits and construction pipeline alongside the HAI.
- Rate drops can reverse demand fast. If 30-year rates drop from 7% to 5%, the HAI jumps 25–30 points and suddenly renters become buyers. Your tenant pool shrinks. This is a real risk in 2025–2026 if the Fed cuts aggressively. Model a 150-basis-point rate drop and see how it affects your market's homeownership conversion rate.
- Income growth in your tenant base matters more than median income. The HAI uses median family income. If your tenants earn $45,000 (Class C workforce housing), they were priced out of homeownership long before the HAI hit 100. The index is most useful for Class B properties serving tenants in the $60,000–$100,000 income range—the population most sensitive to affordability shifts.
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The Takeaway
The Housing Affordability Index is a leading indicator for rental demand. When the HAI drops below 100, more families are priced out of homeownership and become long-term renters, supporting occupancy and rent growth in your market. The index has sat in historically unaffordable territory (93–98) since 2023, driven by the double hit of 72% home price appreciation and mortgage rates above 7%. For rental investors, this macro environment means structural tenant demand that won't reverse until either rates drop significantly or home prices correct—neither of which happens overnight. Use the metro-level HAI alongside supply pipeline data to pick markets where demand outpaces new construction.