NAHB/Wells Fargo Cost of Housing Index (CHI)
The NAHB/Wells Fargo Cost of Housing Index (CHI) is a quarterly analysis of housing costs in the United States and in specific metropolitan areas. The CHI represents the portion of a typical family’s income needed to make a mortgage payment on a median-priced home.
For example, a CHI reading of 38% means a typical family in the U.S. would need to allocate 38% of its pre-tax income to cover the mortgage payment for a median-priced home.
Three levels of data are examined within the CHI:
- National-level CHI is tracked for both new and existing homes.
- Metro-level CHI is tracked for existing homes in 176 metropolitan areas.
- Low-income CHI is calculated to examine the cost of housing for people earning 50% of the area’s median income.
CHI Key Findings in Q4 2024
CHI results for the fourth quarter of 2024 are based on a national median income of $97,800 and a median new home price of $419,200 (compared to $410,100 for a median-priced existing home). In Q4 2024:
- 38% of a typical family’s income was needed to make a mortgage payment on a median-priced new single-family home (and 37% for a median-priced existing home).
- 76% of a low-income family’s earnings would be needed to pay for a median-priced new single-family home (and 74% for a median-priced existing home).
The Q4 index also shows that:
- In 10 out of 176 markets in the fourth quarter, the typical family is severely cost-burdened (must pay more than 50% of their income on a median-priced existing home). In 85 other markets, such families are cost-burdened (need to pay between 31% and 50%).
- There are 81 markets where the CHI is 30% of earnings or lower.
Most Cost-Burdened Markets in Q4 2024
- San Jose-Sunnyvale-Santa Clara, Calif. (87% of a typical family’s income is needed to make a mortgage payment on an existing home)
- Urban Honolulu, Hawaii (74%)
- San Diego-Chula Vista-Carlsbad, Calif. (69%)
- San Francisco-Oakland-Berkeley, Calif. (69%)
- Naples-Marco Island, Fla. (65%)
Least Cost-Burdened Markets in Q4 2024
- Decatur, Ill. (16% of a typical family’s income is needed to make a mortgage on an existing home)
- Cumberland, Md.-W.Va (17%)
- Springfield, Ill. (17%)
- Elmira, N.Y. (19%)
- Peoria, Ill. (19%)
Methodology of the CHI
The CHI is calculated as the ratio of mortgage payment over median family income. The mortgage payment (numerator) is calculated by taking the median home price (assuming a 10% down payment) and adding taxes, home owner’s insurance and private mortgage insurance (PMI).
Median family income (the denominator) is derived from data provided by the Department of Housing and Urban Development (HUD).
Low-Income CHI follows the same methodology, but the denominator is 50% of the area’s median income.
Cost of Housing Index (CHI) vs. Housing Opportunity Index (HOI)
The primary advantage of the new CHI compared to its predecessor, the now-retired HOI, is ease of interpretation. The CHI is a useful tool — especially for state and local home builders associations — to more easily convey to local authorities the burden that housing costs represent for middle-income and low-income families in their markets.
