Median monthly mortgage payments for new purchases fell for a third consecutive month in August, the Mortgage Bankers Association (MBA) reported Thursday, offering a measure of relief to homebuyers as housing costs remain historically high.

The MBA’s Purchase Applications Payment Index (PAPI), which tracks new monthly mortgage payments over time relative to income, showed median payments declined $13 to $2,162 last month.

That figure was nearly 3% higher than a year ago, however, as higher mortgage rates contributed to a $62 increase. Purchase loans on newly constructed homes also edged higher, with median payments rising to $2,214 from $2,210 in July.

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Mortgage rates are expected to remain at elevated levels through the end of next year, housing economists broadly agree.

Higher borrowing costs erode purchasing power, while continued declines in new loan amounts were cited by the MBA as the primary driver of lower new mortgage payments last month.

“Homebuyer affordability improved slightly in August, as a decline in the median purchase loan amount helped offset the impact of higher mortgage rates,” said Edward Seiler, associate vice president of housing economics at the MBA, in a statement accompanying the monthly report.

The average mortgage size of $374,478 in July, according to the most recent MBA data, was less than 0.5% higher than year-ago levels of $372,745.

However, that figure was roughly 4.8% lower than the average mortgage size of $393,344 in July 2024 and 11.6% lower than the $423,500 recorded during the same month in 2023.

The MBA said Thursday that the national PAPI slid 0.6% to 154.3 in August from 155.2 in July, settling the index 1.1% lower than a year ago. A drop in the index reflects improved affordability.

“Affordability also improved compared to a year ago as earnings growth outpaced the increase in mortgage payments,” added Seiler. “However, conditions remain challenging, with 27 states seeing affordability decline in August.”

PAPI combines data from MBA’s weekly applications survey with weekly earnings data from the U.S. Bureau of Labor Statistics to measure payment burdens relative to income.

Median mortgage payments for conventional mortgage applicants seeking loans underwritten to Fannie Mae and Freddie Mac standards were $2,188 in August, up roughly 3.6% from $2,112 a year ago.

New mortgage payments for loans insured by the Federal Housing Administration were slightly lower than a year ago, however, falling $7 to $1,856. That is also a decrease from $1,901 in July.

States and state equivalents with the lowest PAPI last month — signaling the best relative mortgage affordability — were Washington, D.C., Louisiana, West Virginia, Connecticut and New York. Idaho, Nevada, Rhode Island, Arizona and Tennessee had the highest PAPIs.