“Affordability conditions have now improved for six months in a row as lower mortgage rates and strong growth in household incomes have increased the purchasing power of potential buyers,” said Edward Seiler, MBA’s vice president of housing economics and executive director of the Research Institute for Housing America.
Seiler said the MBA expects affordability conditions “will continue to improve through 2026, with home prices expected to decline 0.3% nationally and mortgage rates remaining around 6.4% throughout the year.”
An increase in the MBA PAPI indicates a deterioration in affordability for borrowers, due to a higher mortgage repayment ratio due to larger loan amounts, higher mortgage rates or lower income.
A decline in the index indicates an improvement in affordability, usually due to smaller loan amounts, lower mortgage rates or rising incomes.
For borrowers with lower payments in the 25th percentile or lower, the national average payment rose to $1,409 in November, up from $1,402 in October.
Mortgage costs also fell compared to rents. The ratio of mortgage payments to rent payments at MBA fell from 1.45 in the second quarter to 1.35 in the third quarter, while the national average rent rose to $1,534, according to U.S. Census Bureau facts.
By loan type: the average payment for Federal Housing Administration (FHA) applicants fell to $1,776 in November, compared to $1,789 in October and $1,898 a year ago. The average payment for conventional loan applicants was $2,063, unchanged from September and down from $2,133 in November 2024.
Idaho (230.7), Nevada (226.3), Arizona (207.6), Rhode Island (198.7) and Utah (197.1) recorded the highest PAPI values, while Louisiana (106.7), Connecticut (112.4), West Virginia (119.9), New York (121.4) and Maryland (122.1) had the lowest values.
Affordability also improved modestly for black, Hispanic and white households, with PAPI levels declining in all three groups in November.
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