The national median payment applied for by homebuyers seeking a mortgage fell $27 month over month in August to $2,100. Median payments were $43 higher in August than a year ago, however, reflecting a 2.1% increase.
The nudge toward monthly improvement in affordability was helped by lower mortgage rates and stronger income growth, according to the Mortgage Bankers Association (MBA), which published its monthly Purchase Applications Payment Index (PAPI) on Thursday.
“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,” said Edward Seiler, associate vice president of housing economics at the MBA and executive director of the Research Institute for Housing America.
Median earnings were up 3.2% in August compared to one year ago, the MBA reports, while payments increased 2.1%, rendering affordability 1.1% higher on an annual basis. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,445 in August from $1,468 in July.
States with the highest PAPI — reflecting the lowest affordability per the MBA’s measure of purchase application amounts and wage growth — were Idaho (256.5), Nevada (241.9), Arizona (214.0), Rhode Island (208.3) and Utah (205.0). States and districts with the lowest PAPI were Alaska (115.1), Louisiana (115.3), Washington, D.C. (117.2), Connecticut (121.7) and New York (123.6).
Median mortgage payments applied for by homebuyers purchasing new homes fell to $2,210 in August from $2,233 in July, according to the MBA’s Builders’ Purchase Application Payment Index and the association’s Builder Application Survey.
The national median mortgage payment for mortgage applicants seeking loans backed by the Federal Housing Administration was $1,863 in August, down $2 from July but up $46 from last year. The national median mortgage payment for conventional loan applicants was $2,112, down $48 from July but up $56 from last year.
