It decreases the density of air. We know this because Charles tells us.
Charles's law states that:
V1/T1 = V2/T2
Where V1 and T1 are the initial volume and temperature of a gas, and V2 and T2 are the volume and temperature of the gas after it has been heated.
Because I don't feel like making up a bunch of numbers, the main point of this law is this: When you heat up a gas, its volume increases. So if you have one liter of a gas in a balloon, you'll have more than one liter's worth of balloon after you heat it up.
How does this affect density? Well, density is equal to the mass of an object divided by its volume.
D=m/V
If the mass stays the same and the volume increases, we find that the density decreases.
Similarly, if you cool a gas it gets smaller and its density goes up.