Homebuyer affordability improved for the fourth straight month in August, as the national median payment on purchase applications fell to $2,100 from $2,127 in July, according to the Mortgage Bankers Association’s Purchase Applications Payment Index (PAPI). PAPI, which tracks new mortgage payments relative to income, declined 1.2% from July to 157.5, signaling better affordability.
An increase in PAPI signals worsening affordability (higher payment-to-income ratios due to bigger loan amounts, higher rates, or lower earnings). A decrease signals improving affordability (smaller loan amounts, lower rates, or higher earnings).
“Affordability conditions have improved for four straight months, with lower mortgage rates and stronger income growth boosting prospective buyers’ purchasing power,” said Edward Seiler, MBA’s associate vice president for housing economics. “MBA is expecting that moderating home-price appreciation, coupled with lower rates, will continue to ease affordability constraints and help to boost activity in the housing market.”
The report noted that median earnings were up 3.2% from a year ago, offsetting a 2.1% rise in payments. For lower-payment mortgages, at the 25th percentile, the median payment dipped to $1,445. Payments also fell for FHA and conventional loan applicants, while MBA’s Builder Applications survey showed the median builder loan payment dropping to $2,210. Affordability rose across racial groups, with the PAPI declining for Black, Hispanic, and White households. Idaho, Nevada, and Arizona ranked among the least affordable states, while Alaska and Louisiana were the most affordable.
By The Numbers
- Median payment (national): $2,100 in August; down $27 from July; up $43 year over year (+2.1%).
- PAPI (national): 157.5 in August; down 1.2% from July’s 159.4; down 1.1% YoY as earnings outpaced payments.
- Earnings: +3.2% YoY; payments +2.1% YoY — the gap improved affordability.
- Lower-payment loans (25th percentile): $1,445 in August; down from $1,468 in July.
- Builders’ PAPI (BPAPI): $2,210 in August; down from $2,233 in July.
Loan-Type Detail
- FHA applicants: $1,863 in August; down from $1,865 in July; up from $1,817 in August 2024.
- Conventional applicants: $2,112 in August; down from $2,160 in July; up from $2,056 in August 2024.
Affordability By State (PAPI)
Highest (least affordable): Idaho (256.5), Nevada (241.9), Arizona (214.0), Rhode Island (208.3), Utah (205.0)
Lowest (most affordable): Alaska (115.1), Louisiana (115.3), District of Columbia (117.2), Connecticut (121.7), New York (123.6)
Household Affordability Trends
Affordability improved across racial groups as PAPI declined:
- Black households: 158.9 → 156.9
- Hispanic households: 148.5 → 146.6
- White households: 160.5 → 158.5
