Homebuyer Affordability Remains Constrained as Purchase Apps Slip in June

Homebuyer affordability was nearly unaffected in June, as the national median payment applied for by purchase applicants decreased 0.1% to $2,162 from $2,165 in May, according to the Mortgage Bankers Association's (MBA) Purchase Applications Payment Index (PAPI).

Key Findings of MBA's Purchase Applications Payment Index (PAPI) for June 2023

• The national median mortgage payment was $2,162 in June, down from $2,165 in May. This is up $269 from one year ago, equal to a 14.2% increase.
• The national median mortgage payment for FHA loan applicants was $1,824 in June, up from $1,802 in May and up from $1,474 in June 2022.
• The national median mortgage payment for conventional loan applicants was $2,205, up from $2,202 in May and from $1,959 in June 2022.
• Homebuyer affordability increased slightly for Black households, with the national PAPI decreasing from 176.5 in May to 176.3 in June.
• Homebuyer affordability increased slightly for Hispanic households, with the national PAPI decreasing from 169.1 in May to 168.9 in June.
• Homebuyer affordability increased slightly for White households, with the national PAPI decreasing from 178.7 in May to 178.5 in June.

“Homebuyer affordability is still strained this summer, with mortgage rates remaining high and volatile, and home prices high because of low inventory,” said Edward Seiler, MBA’s Associate VP, Housing Economics, and Executive Director, Research Institute for Housing America. “The median purchase application amount fell from $330,000 to $326,000 in June, which is one positive sign that home prices are stabilizing. An ongoing combination of flattening home prices and lower rates would offer reprieve for households who are looking to buy a home.”

The top five states with the highest PAPI were:

1. Nevada (263.9)
2. Idaho (260.9)
3. Arizona (238.4)
4. California (230.8)
5. Florida (225.3)

The top five states with the lowest PAPI were:

1. Alaska (123.1)
2. Louisiana (129.8)
3. Wyoming (130.6)
4. Connecticut (131.0)
5. North Dakota (136.8)

The national PAPI decreased 0.1% to 177.2 in June from 177.4 in May. While the index decreased slightly last month, the PAPI still remains at elevated levels.

Median earnings were up 5.7% compared to one year ago and while payments increased by 14.2%, the strong earnings growth means that the PAPI is up 8.1% on an annual basis. For borrowers applying for lower-payment mortgages, the national mortgage payment decreased to $1,459 in June from $1,462 in May.

The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased from $2,515 in May to $2,520 in June.

To read the full report, including more data, charts, and methodology, click here.