Lauren Bunting Broker MD & DE

Homebuyer Affordability

Friday, September 08, 2023, Lauren Bunting

The Mortgage Bankers Association (MBA) released their monthly report on homebuyer affordability at the end of August. The news release said July was challenging but mostly unchanged from June, with the national median payment applied for by purchase applicants remaining at $2,162. The figures are pulled from the MBA’s Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey (WAS).

“Prospective homebuyers continued to face challenging conditions in July, with elevated and volatile mortgage rates and low housing inventory serving as a formidable one-two punch that suppressed mortgage applications and sales activity,” said Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “With mortgage rates currently above 7 percent and expected to remain above 6 percent by the end of the year, affordability will remain a hurdle for many households looking to buy a home.”

Median earnings were up 3.7 percent compared to one year ago, and while payments increased by 17.2 percent, the strong earnings growth means that the PAPI is up 13.0 percent on an annual basis. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,451 in July from $1,459 in June.

Additional Key Findings of MBA's Purchase Applications Payment Index (PAPI) – July 2023

  •  The national median mortgage payment was $2,162 in July (unchanged from June). It is up $318 from one year ago, equal to a 17.2% increase.
  •  The national median mortgage payment for FHA loan applicants was $1,854 in July, up from $1,824 in June and up from $1,461 in July 2022.
  •  The national median mortgage payment for conventional loan applicants was $2,197, down from $2,205 in June and up from $1,892 in July 2022.
  • The top five states with the highest PAPI were: Idaho (258.7), Nevada (258.1) Arizona (237.0), California (234.0), and Florida (224.1).
  • The top five states with the lowest PAPI were: Connecticut (121.0), Louisiana (125.3), Alaska (128.4), West Virginia (131.2), and New York (136.9).

Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.

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