Manvel criticizes the NAHB index for not measuring the cost of living. He is right, if he expects the index to measure something more than it' s designed to do. However, housing is one of the few items whose price is heavily determined by location, so that the cost of housing does have a great deal to do with the relative cost of living in one place as opposed to another.
Housing is also a very large share of most families' expenditures.
According to the U.S. Bureau of Labor Statistics, the average American and the average Portland resident both devote one-third of their total spending to housing. The index cannot account for all these possibilities. It is a single measure of relative affordability. The innovative products can be used by any person that qualifies regardless of location, and therefore don't change the underlying comparison of incomes and house prices. The index compares the median family income, as estimated by the U.S. Department of Housing and Urban Development, to the distribution of recent home sales.