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MBA: Housing Affordability Mostly Unchanged In June

Sarah Wolak
Jul 28, 2022
Home prices at the lower end of the market have become affordable than the national average, particularly for those in lower income levels, according to new data from Black Knight Inc.

The national median payment applied for by applicants was down just four dollars to $1,893 in June from $1,897 in May.

KEY TAKEAWAYS
  • For borrowers applying for lower-payment mortgages in the 25th percentile, the national mortgage payment was flat at $1,241.
  • The national median mortgage payment for FHA loan applicants was $1,474 in June, up from $1,430 in May.

Homebuyer affordability was mostly unchanged in June, with the national median payment applied for by applicants down just $4, to $1,893 from $1,897 in May. With minimal changes, the Mortgage Bankers Association (MBA) identified a downturned trend in purchase demand.

This is according to the MBA’s Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments shift across time relative to income, and data from MBA’s Weekly Applications Survey

“Median mortgage applications payments have held steady during the last two months but remain much higher than earlier this year," said Edward Seiler, MBA's associate vice president, housing economics, and executive director, research institute for Housing America. "The typical homebuyer’s mortgage payment in June was $509 more than in January, which is why — along with rising economic uncertainty and high inflation — purchase demand has slowed in markets across the country.”

Seiler said there are signs that home-price growth is moderating, "which is good news for overall affordability if mortgage rates also start declining. The median loan amount in June was down $10,182 from May and has dropped more than $20,000 since it peaked in February.”

The national PAPI decreased 0.2% to 163.9 in June from 164.2 in May, meaning payments on new mortgages take up a smaller share of a typical person’s income. Compared to June 2021’s reported 119.3, the index has jumped 37.4%.

For borrowers applying for lower-payment mortgages in the 25th percentile, the national mortgage payment was flat at $1,241.

The national median mortgage payment was $1,893 in June, down from $1,897 in May and from $1,889 in April. Payments have increased $509, which equates to 36.8%, in the first six months of 2022.   

The national median mortgage payment for FHA loan applicants was $1,474 in June, up from $1,430 in May and $1,022 in June 2021, where the national median mortgage payment for conventional loan applicants was $1,959, down from $1,960 in May but up from $1,389 in June 2021.

The top five states with the highest PAPI were: Idaho (264.2), Nevada (254.6), Arizona (240.2), Utah (217.3), and Florida (211.6). The top five states with the lowest PAPI were Washington, D.C. (103.1), Connecticut (108.2), Alaska (115.4), West Virginia (118.5) and Louisiana (119.0).

Homebuyer affordability increased minimally for Black households, with the national PAPI decreasing from 159.5 in May to 159.2 in June. Homebuyer affordability also increased for Hispanic and White households, with each national PAPI decreasing slightly. 

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