Homebuyer affordability weakened in January as new mortgage application payments increased for the first time in seven months, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI).
The national median monthly payment applied for by prospective buyers rose to $2,070 in January from $2,025 in December, reflecting higher loan amounts relative to income.
MBA’s PAPI — which measures mortgage payments relative to earnings — increased 1.0% in January to 150.3, indicating a modest decline in borrower affordability compared with the previous month. Despite the increase, the Index remains nearly 9.7% lower than a year ago when accounting for wage growth, underscoring broader affordability improvements over the past 12 months.
“Housing affordability declined in January, with the national PAPI increasing for the first time in seven months and applicants’ median monthly payment up $45 compared to December,” said Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America (RIHA). “While the median purchase application amount rose from $320,000 to $332,000, mortgage rates declined over the month. With mortgage rates mostly trending downward, and home-price growth flat or down in many markets, affordability conditions should improve in the months ahead as housing inventory increases.”
Loan Amounts And Affordability Trends
Median purchase loan amounts rose in January, climbing from $320,000 to $332,000, even as mortgage rates trended slightly lower. MBA analysts noted that moderate rate declines and flat or slowing home-price growth in many markets could support affordability in the months ahead, especially if housing inventory expands.
The measure of affordability varied by loan type. For FHA loan applicants, the national median payment fell to $1,782 in January, down from $1,802 in December. Conversely, conventional loan applicants saw their median payment increase to $2,081, though both figures remained below year-ago levels.
Diverse Regional Patterns And Demographic Effects
State-level data revealed the highest PAPI values in markets such as Idaho, Nevada, Rhode Island, Arizona, and Florida, while Washington, D.C., Alaska, and Connecticut reported the lowest relative payment burdens. The report also showed affordability dipped across demographic groups — including Black, Hispanic, and white households — as monthly payment obligations grew modestly from December to January.
