Mortgage affordability, homebuyer activity was static in February
By product type, the median mortgage payment for conventional loan applicants was $2,226, up from $2,225 in January and up from $2,194 in February 2024. For FHA loan applicants, the median payment was $1,907 in February, down from $1,934 in January and up from $1,872 in February 2024.
“Homebuyer affordability conditions remained unchanged in February as many homebuyers continue to weigh their options on entering the housing market amid economic uncertainty and slowly declining mortgage rates,” Edward Seiler, MBA’s associate vice president for housing economics, said in a statement.
“While February’s data reflects little movement, we do expect that rising housing inventory, coupled with lower mortgage rates, will spur additional activity in the housing market.”
The national PAPI increased 0.1% from January to a reading of 166.2 in February. Median earnings were up 5% compared to one year ago.
While payments increased by 1% over the past year, the significant growth in earnings means that the PAPI is down 3.8% on an annual basis. For borrowers applying for lower-payment mortgages (the 25th percentile), the median monthly payment decreased to $1,506 in February, down from $1,519 in January.
An increase in MBA’s PAPI, which indicates declining borrower affordability conditions, 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 equates to improving borrower affordability conditions and occurs when loan application amounts decrease, mortgage rates decrease or earnings increase.
MBA’s Builders’ Purchase Application Payment Index showed that the median monthly payment for new-home purchase mortgages, using data from MBA’s Builder Application Survey, decreased from $2,531 in January to $2,463 in February.
By demographic, homebuyer affordability decreased marginally or Black households, with the national PAPI increasing from 157.3 in January to 157.4 in February.
Affordability remained consistent for Hispanic households and white households, with the national PAPIs remaining unchanged from January to February at 158.8 and 169.3, respectively.
The states with the highest PAPI readings were Idaho (252.5), Nevada (241.8) and Rhode Island. At the opposite end of the spectrum, the states with the lowest PAPI were Louisiana (121.9), Connecticut (125.0) and North Dakota (126.1).
