Deciphering the Data about Housing Affordability

We are excited to announce that Jonathan Miller, who has long authored the most authoritative report on the residential real estate market, is partnering with The Real Deal. Below, you’ll find his Housing Notes column, which will now run on our site several times a week. In addition, Miller’s quarterly report for New York City, which he published through Douglas Elliman for more than three decades, will now be “The Real Deal report, prepared by Jonathan Miller.” Miller’s data venture, Streetmatrix, which provides hyperlocal data, will provide statistics to TRD Data subscribers.— TRD editors

We already know there is a housing affordability crisis

We probably have at least two and a half years of continued inflationary federal economic policies, despite the clear damage already incurred, including some form of tariffs, an ongoing Iran War, significant anti-immigration policies reducing labor supply and the continued likelihood that mortgage rates will rise. For the past couple of years, I’m often asked about when inventory will normalize in the northeastern U.S. My answer was consistently three to five years in 2025, but after the start of the Iran War on February 28th, I started thinking it was seven to 10 years. Oxford suggests a similar time period.

In fact, Newsday has just chronicled the plight of typical homeowners in Long Island. Modestly priced suburbs are seeing more than 80 percent of their sales driven by bidding wars. All of Long Island, excluding the East End, saw a bidding-war market share of 56.9 percent, with competition for modestly priced housing showing the highest bidding-war intensity. To be clear, more than one in two sales market-wide that closed in 1Q26 were at or above the last asking price! And the level of unaffordability isn’t the same as listening to my grandfather when I was a kid, who was the motion picture projectionist in his small Connecticut town (as well as the spotlight operator whenever the Ice Capades came into town), waxing poetic about how “candy bars were once 5¢ when I was your age.”

This is not a story of billionaires paying above ask,” Miller said. “This is people of more modest means being subjected to intense competition from their peers, and they literally have no choice if they want to own a home.”

Newsday: Inside Long Island’s most competitive housing markets, and why their homes typically sell above market price. It’s a great read.

Ritholtz: NAR sees only one month when housing wasn’t affordable

Source: Jonathan Miller

Gotta love this photo I took in Times Square, Manhattan, nearly three decades ago. I’ve used it a lot in the context of bad data sources. Here’s a good example. Back during the early days of blogging, when I was about three years in from my 2005 blogging start, I remember a blog post by my friend Barry Ritholtz over at The Big Picture. I distinctly remember it because of its none-too-subtle title: NAR Housing Affordability Index is Worthless, which really thrashed NAR’s look at affordability. It’s really worth a read. Five years later, he updated his analysis and came up with a similar conclusion, with another not-subtle title: Housing Affordability Index: Still Worthless.

Barry argues that NAR’s Housing Affordability Index (HAI) is deeply flawed because it answers the wrong question: it measures whether a “typical” household can qualify for a mortgage on a “typical” home under idealized assumptions, not whether homes are genuinely affordable in real life. It assumes a 20 percent down payment that many buyers cannot afford, ignores credit constraints and debt, and excludes major costs like taxes, insurance, HOA fees and maintenance.

The fact that the index showed that homes were “affordable” through most of the 2000s bubble is a tell.

And since mid-2022, the index shows that housing affordability is straddling 100 on the index, the baseline of affordability, when in reality, low affordability has kept existing sales volume nationally well below long-term norms during this period, which means that housing is likely below the baseline affordability level this index recommends.

But the messaging aligns with a trade group doing its job by looking out for its members, always showing that “now is a good time to buy.” One of the most important concepts I heaped on my grad students at Columbia was that the source of information is just as important as the content itself. A trade group is not a neutral source of information.

While I was reminiscing about Barry’s previous takedowns of NAR’s affordability index this morning, I got this very nice and unexpected story placement in NAR’s daily newsletter, as friends began forwarding it to me — honestly, I felt a quick pang of guilt after my take on NAR’s HAI. But I actually like the content in their magazine, often getting something out of it. Ha.

Oxford Economics Affordability Index Seem More Realistic

Using Oxford’s November 2024 report (can’t get a hold of the actual 2026 report, just the coverage of their news release on Investopedia and on Real Estate News, but here are a few clues as to why Oxford seems more realistic, or at the minimum, much closer to real-world conditions:

2024 Oxford Report Takeaways

Housing affordability has fallen sharply since the pandemic, and the threshold to qualify for a purchase has almost doubled in just five years. Oxford uses additional costs for homeownership, such as property taxes, homeowners’ insurance and HOA fees, all of which stand on their own as news items.

NAR — Cost: median‑priced existing national home price, with a 30‑year fixed rate and 20 percent down

Oxford — Cost: median existing home prices by metro with a 30‑year fixed rate and 20 percent down mortgage payment, plus property taxes, homeowners’ insurance and HOA fees

Affordability has deteriorated in every major U.S. metro as prices jumped and mortgage rates nearly doubled. A buyer needed about twice the income required for the same purchase in 2019, before the rocket-ship rise in appreciation, because listing inventory was obliterated off the face of the earth (a slight exaggeration). Since 2024, about one‑third of U.S. households, down from nearly two‑thirds five years ago, can afford to buy a home. And remember, the homeownership rate has been straddling roughly two-thirds of the housing stock versus one-third rentals.

2026 Oxford Report takeaways by two media outlets that covered the Oxford Economics press release, specifically about how long it will take for housing to be affordable.

Investopedia (They interpret the Oxford report with a 10-year wait)

Households with median incomes are far short of being able to afford the payments on median houses, according to an index of home affordability.
Forecasters at Oxford Economics expect home affordability to continue to decline over the next decade.
Several unlikely events could turn the tide, including a freeze in home prices and an unexpected drop in mortgage rates.

Real Estate News (They interpret the Oxford report with a 7-year wait)

Reaching 100 (the level at which homes are generally considered affordable) by 2033 if home prices remain flat and mortgage rates drop by about 50 basis points
Reaching 100 by 2036 if home prices remain flat and rates do not drop
Staying below 80 for the next 10 years if historic baseline trends continue

Final Thoughts

The housing affordability crisis is both visible in intense bidding wars among middle-income buyers and obscured by flawed metrics like NAR’s HAI, which reflects theoretical qualifications rather than real costs. More comprehensive analytics, such as Oxford Economics’, show affordability has sharply worsened, with required incomes to purchase roughly doubling since 2019 and little relief likely for seven to 10 years. Beyond this, sustained price pressure at the lower end of the market is weakening housing’s role in wealth building.

Regardless of how we measure it, I believe most understand that housing affordability is getting worse, and there don’t seem to be any solutions actively proposed.The actual final thought — When you decide to push the “envelope” on something like affordability, it is important to consider this.

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