Homebuyer affordability declined in April, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI) released Thursday.
The index measures how new monthly mortgage payments vary across time, relative to income, drawing from data from MBA’s weekly applications survey.
The national median payment for purchase mortgage applicants was $2,256 in April, up from $2,201 in March. April’s figure was $144 higher on a year-over-year basis, equal to a 6.8% increase. Median earnings were up 4.6% compared to one year ago.
The national median mortgage payment for Federal Housing Administration (FHA) loan applicants was $1,955 in April, up from $1,898 in March and up from $1,750 in April 2023. The median payment for conventional loan applicants was $2,271, up from $2,222 in March and up from $2,170 in April 2023.
“Homebuyer affordability conditions declined further as mortgage rates remained above 7% in April, sidelining many prospective buyers from entering the housing market,” Edward Seiler, MBA’s associate vice president of housing economics, said in a statement. “In addition to lower mortgage rates, more housing inventory is desperately needed in markets throughout the country this summer to alleviate these tough affordability conditions.”
An increase in MBA’s PAPI speaks to declining borrower affordability conditions. It means that the mortgage payment-to-income ratio is higher due to increasing loan amounts, rising mortgage rates or a decrease in earnings. A decrease in the PAPI occurs when loan application amounts decrease, mortgage rates decrease or earnings increase.
The top five states with the highest PAPI readings in April were Idaho, Nevada, Arizona, Florida and Rhode Island. The lowest PAPI readings were recorded in Alaska, Louisiana, Connecticut, New York and Washington, D.C.
