In a positive turn of events in the industry, homebuyer affordability improved in November, according to the Mortgage Bankers Association's latest data. The national median payment applied for by purchase applicants saw a decrease to $2,137 from $2,199 in the previous month.
“Homebuyer affordability improved in November, with a decline in mortgage rates providing relief to prospective homebuyers,” said Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America. “MBA expects that affordability conditions will continue to improve as mortgage rates decline, which should generate increased demand heading into the spring homebuying season.”
The MBA’s Purchase Applications Payment Index (PAPI) is a key measure of how new monthly mortgage payments vary relative to income. A decrease in the PAPI suggests improving borrower affordability conditions, often resulting from lower loan application amounts, declining mortgage rates, or increased earnings.
November's national PAPI witnessed a 2.8% drop to 170.9, marking its lowest level since February 2023. Despite an 8.1% year-over-year increase in payments, median earnings growth of 3.9% has contributed to a more manageable 4% annual increase in the PAPI. Additionally, for those applying for lower-payment mortgages, the national median mortgage payment fell to $1,425 from $1,466.
The Builders’ Purchase Application Payment Index (BPAPI) also reflected a decrease in the median mortgage payment for purchase mortgages, dropping from $2,672 in October to $2,597 in November.
Key Findings of the November 2023 PAPI Report
- The national median mortgage payment decreased by $62 from October, standing at $2,137 in November.
- FHA loan applicants saw a decrease in the national median mortgage payment to $1,902, down from $1,955 in October.
- For conventional loan applicants, the national median payment decreased to $2,137, from $2,208 the previous month.
- The highest state PAPIs were recorded in Idaho, Nevada, Arizona, Florida, and Utah.
The lowest state PAPIs were observed in Wyoming, Louisiana, Alaska, Connecticut, and New York. Also, homebuyer affordability improved across various demographics, with decreases in the national PAPI for black, Hispanic, and white households.
