Homebuyer affordability decreased slightly in April, falling 0.6% to a score of 163.0 on the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI).
That’s down from an index score of 164.1 in March.
The index measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey.
In April, the national median payment applied for by purchase applicants was $2,186, up from $2,173 in March.
That’s down by $70 from one year ago, equal to a 3.1% decrease.
“Homebuyer affordability conditions declined somewhat in April and remain elevated overall,” says Edward Seiler, associate vice president, housing economics, MBA, and executive director, Research Institute for Housing America, in a statement. “Economic uncertainty and high mortgage rates continue to weigh on prospective buyers’ decisions on whether to enter the housing market.”
“Even with the increase in mortgage rates over the month, the median purchase application loan amount decreased slightly to $328,932, indicating that home prices are moderating,” Seller adds. “Slower home-price growth, and the overall trend of more inventory, are positives for housing this summer.”
An increase in the index score – indicative of declining borrower affordability conditions – means that the mortgage payment to income ratio is higher due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings. A decrease in the PAPI – indicative of improving borrower affordability conditions – occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.
Median earnings were up 4.8% in April compared to one year ago, and while payments decreased 3.1%, the significant earnings growth means that the PAPI is down (affordability is higher) 8.4% on an annual basis.
For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,497 in April, down from $1,499 in March.
Photo: Alexander Grey