“Affordable for whom?”
That’s the question buried inside every headline about the housing crisis. As prices climb and wages lag, the dream of homeownership slips further from reach for millions of Americans. But understanding how unaffordable housing has become — and for whom — requires more than just gut feelings or anecdotal evidence. It takes data.
That’s where affordability metrics like the Housing Affordability Index and the Case-Shiller Index come in. For credit unions committed to financial wellbeing, knowing how to interpret these tools — and their limitations — is critical to making informed lending decisions, guiding members, and shaping long-term strategy.
Measures Of Housing Affordability
There are a few ways to measure housing affordability. The first, and perhaps most widely reported, is the National Association of Realtor’s Housing Affordability Index, published quarterly. It is a measurement that gauges the ability of a median income American to purchase a home.
Preliminary estimates for the first quarter of 2025 show the index increased to 102.5, an upswing in affordability. Despite rate increases, the median price of a single family home declined $7,500, which lowered the qualifying income needed to afford this home to $101,743.
QUARTERLY HOUSING AFFORDABILITY INDEX
FOR THE U.S. HOUSING MARKET | DATA AS OF 03.31.25
SOURCE: National Association of Realtors
In the past, NAR has also published measures based on geographic area, allowing for analysis at a more granular level.
Alternatively, the Case Shiller Index, developed by economists Karl Case and Robert Shiller, is another popular measure of the housing market. It focuses squarely on an index of housing price averages, examining their growth from an indexed value of 100 in 1890. Similarly to the National Association of Realtors, it publishes both a national number and a more granular number. The more granular number represents housing indices both for the top 10 metro areas and the top 20 metro areas.
Lastly, a major measure of housing affordability is the percentage of household income spent on rent. Although this isn’t a published statistic like the Housing Affordability Index or the Case-Shiller Index, the Census Bureau publishes an estimate that is widely tracked. In 2024, the bureau found that more than 21 million renter households spend at least 30% of their income on housing, meaning 49.7% of all renter households are cost burdened.
What Does This Mean For Credit Unions?
Credit unions tend to serve members with lower average incomes, meaning housing costs comprise a larger percentage of their budgets than their fellow banking Americans. When housing eats up a larger portion of budgets, other expenses can fall by the wayside, even interest payments. After all, if rent accounts for 40%, and climbing, of the household budget, there is less left over to put toward credit card or auto loans. This is potentially detrimental for the credit union balance sheet.
Affordable housing solutions make financial sense for members as well as credit unions, and credit unions have begun to think creatively about how to tackle the topic. For example, one Vermont credit union tapped into state investments to enable lower rates for commercial members, spurring the development of both smaller apartments and larger projects. Wings Financial Credit Union also takes a proactive approach to housing with a repricing promotion aimed at borrowers who are locked out of refinancing or purchasing a new home. And higher rates, soaring prices, and low stock have nudged Northern Credit Union to revamp its geofencing strategy with new locations, enhanced outreach, and real estate agent partnerships in addition to its tried-and-true mobile coupons to help members save on their home loans.
The Pros And Cons Of Affordability Measures
Housing makes up the largest line item in America’s collective budgets. It’s only right that policymakers, credit unions, and Americans at large would want to understand affordability.
However, focusing on purchase price discounts many other costs associated with owning a home and tends to not reflect “all-in” affordability. Many costs, such as insurance, home repair, and taxes, are variable and difficult to model at a national level, although they might be included in regional price dynamics, for example the price of flood insurance might already be factored into the price for a home in Tampa, FL.
These housing affordability measurements also tend to focus on homeownership despite the fact renters tend to be even more cost burdened than homeowners. Helping out renters is a key consideration in the housing affordability conversation.
As credit unions work to support members’ financial wellbeing, a clear-eyed understanding of housing affordability, and its limitations, is essential. These metrics aren’t perfect, but they provide a starting point for data-informed conversations, smarter lending, and mission-aligned innovation. Because when housing becomes more affordable, financial health becomes more attainable.
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