Key facts
- The national median payment for new purchase mortgage applications decreased to $2,191 in June.
- The Mortgage Bankers Association's Purchase Applications Payment Index (PAPI) fell 0.3% to 157.9 in June.
- Lower application loan amounts contributed to the decrease in median mortgage payments.
- Despite the monthly decrease, mortgage payments consume a smaller share of income annually compared to a year ago.
- Western markets continue to experience the most acute affordability pressures.
- The median payment for new construction applications increased to $2,199 in June.
Homebuyer affordability saw a marginal improvement in June, with the national median payment for new purchase mortgage applications falling to $2,191 from $2,198 in May, according to the Mortgage Bankers Association (MBA).
The MBA's Purchase Applications Payment Index (PAPI), which measures new monthly mortgage payments against household income, declined 0.3% to 157.9 in June. This decrease was attributed to lower application loan amounts offsetting increases in mortgage rates, according to Edward Seiler, MBA's associate vice president of housing economics.
Annually, affordability improved by 3.5%, as household earnings grew by 4.6% over the past year, meaning mortgage payments consumed a smaller portion of income compared to the previous year, though they remain historically elevated.
For borrowers seeking lower-payment loans, the median payment at the 25th percentile decreased to $1,522 in June. Changes across loan types were minimal, with FHA borrowers seeing a slight decrease to $1,872 and conventional loan applicants experiencing a minor drop to $2,209.
Affordability pressures were most pronounced in Western markets, with Idaho, Nevada, and Arizona reporting the highest PAPI readings. Conversely, Louisiana, Washington D.C., and Vermont showed relatively better payment-to-income ratios.
Improvements were noted across racial and ethnic groups, with the PAPI declining for Black, Hispanic, and White households. However, payments for newly constructed single-family homes edged higher in June, rising to $2,199 from $2,173 in May.