Is homebuyer affordability the one of the few market declines we can appreciate? According to the Mortgage Bankers Association, the answer and yes—and it’s improving.
Per the MBA’s Purchase Applications Payment Index, the national median payment applied for by applicants decreased from $1,844 in July to $1,839 in August. That marks the third consecutive month of improved affordability.
A decrease in Index is indicative of improving borrower affordability conditions as it occurs when loan application amounts decrease, mortgage rates decrease or earnings increase.
“Most of the country saw modest improvements in homebuyer affordability for the third straight month because of slightly lower mortgage rates amidst steady income gain growth. The healthy labor market continues to be a positive for the housing market, despite ongoing economic uncertainty and high inflation,” said Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “Higher mortgage rates have reduced borrowers’ purchasing power since the start of the year. The median loan amount in August was $313,500, down from a peak of $340,000 in February.”
Good news in the immediate face of rising loans, but keep in mind that monthly payments are still up by $456 in the first eight months of the year—equal to a 33 percent increase.