​Abstract:

We offer a new home affordability estimate (HAE) that focuses on the share of housing stock that is affordable to certain households in the United States.  The methodology considers affordability as it relates to funds available for down payments, initial monthly housing-related payments, and future projections of household income and costs.  The HAE builds upon existing industry statistics in two ways.  First, existing affordability indexes make certain assumptions for one or more of those funding factors.  We can observe actual investment and expense values.  Second, existing industry statistics consider “typical” families that earn the median household income level.  The HAE is sufficiently more flexible for evaluating families at different places in the income distribution.  This paper discusses the assumptions and processes for creating the HAE indexes; compares the national time series for very low-income, low-income, and median-income families; and then documents trends across metropolitan areas.  We offer the data for public usage and leave commentary about implications to future research.