Home affordability improved in December, but just slightly. The national median payment applied for by purchase applicants decreased in December to $2,127, down $6 from November, according to the Mortgage Bankers Association (MBA).

The association’s purchase applications payment index (PAPI) measures how new monthly mortgage payments vary over time, relative to income, using data from MBA’s weekly applications survey. An increase in the PAPI means that mortgage payments to income ratios are higher due to increasing application loan amounts, rising mortgage rates or a decrease in earnings. A decrease in the PAPI, happens when loan application amounts decrease, mortgage rates decrease or earning increase.

The national PAPI decreased 0.3% to 160.8 in December, as median earnings were up 4.1% compared to one year ago. Payments also increased by 3.5%. The earnings growth means that the PAPI was down 0.6% on an annual basis.

The median mortgage payment for purchase mortgages from MBA’s builder application survey increased to $2,500 in December from $2,481 in November. Homebuyer affordability increased slightly for White, Black and Hispanic households in December.

“Homebuyer affordability conditions were essentially flat in December, the result of somewhat volatile mortgage rate movements and moderating home-price growth,” said Edward Seiler, MBA’s associate vice president of housing economics, and executive director of the Research Institute for Housing America.

Seiler said that 2024 was a sluggish year for home sales because of weak affordability conditions throughout the country. The MBA expects conditions in 2025 to improve as housing supply increases, giving prospective buyers more options and putting less pressure on their budgets.