Homebuyer Affordability Improves For Fifth Straight Month

The Mortgage Bankers Association (MBA)’s Purchase Applications Payment Index (PAPI) for October showed that homebuyer affordability improved for the fifth consecutive month, with the national median payment applied for by purchase applicants decreasing to $2,039 — down from $2,067 in September.

MBA‘s PAPI measures how new monthly mortgage payments vary across time, relative to income, using data from the trade group’s Weekly Applications Survey.

Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America, said that the streak of improved affordability conditions is tied to lower mortgage rates, higher household earnings and flattening home-price growth.

“The median purchase application payment amount in October was $88 lower than one year ago. Affordability is improving — PAPI is at its lowest level since March 2022— and is likely to continue to as mortgage rates hold to around 6% and more supply comes onto the market,” Seiler said.

An increase in MBA’s PAPI indicates declining borrower affordability conditions, and that the mortgage payment-to-income ratio is higher due to increasing application loan amounts, rising mortgage rates or a decrease in earnings.

Conversely, a decrease in the PAPI indicates improving borrower affordability conditions and occurs when loan application amounts decrease, mortgage rates decrease or earnings increase.

The national PAPI fell 1.6% to a reading of 152.0 in October, down from 155.0 in September, reflecting a 4.2% drop in typical mortgage payments. And earnings growth pushed affordability up 5.5% on an annual basis.

For borrowers applying for lower-payment mortgages, at the 25th percentile, the national payment fell to $1,402, down from $1,418 the previous month.

The national median mortgage payment in October was $2,039, down $28 from September and $88 lower than a year earlier. Federal Housing Administration (FHA) borrowers saw their median monthly payment dip slightly to $1,789, compared to $1,792 in September and $1,842 in October 2024.

Conventional loan applicants, meanwhile, reported a median payment of $2,063, down from $2,105 the month prior and $2,134 a year earlier.

The states with the highest PAPI readings — meaning the least affordable markets — were Idaho (238.0), Nevada (230.7), Rhode Island (199.4), Arizona (198.6) and Tennessee (192.8). The most affordable markets were Louisiana (113.5), Connecticut (116.2), Washington, D.C. (118.6), Hawaii (123.6) and North Dakota (124.9).

Affordability improved across demographic groups. The PAPI for Black households fell to 151.5 in October, down from 154.4 in September. Hispanic households saw their index score decline from 144.3 to 141.6 during the month, while the reading for white households eased from 156.0 to 153.1.