Homebuyer affordability worsened in January for the first time in seven months, despite mortgage rates hitting
The national median payment applied for by purchase applicants rose from $2,025 in December to $2,070 last month, according to the Mortgage Bankers Association's Purchase Applications Payment Index. That's on par with levels recorded in September, but still down $135, or 6.1%, year over year.
"While the median purchase application amount rose from $320,000 to $332,000, mortgage rates declined over the month," said Edward Seiler, MBA's associate vice president of housing economics and executive director of the Research Institute for Housing America, in a press release Thursday. "With mortgage rates mostly trending downward, and home-price growth flat or down in many markets, affordability conditions should improve in the months ahead as housing inventory increases."
Given mortgage rates were lower and earnings rose in January compared with December, the increase in the index, indicative of borrower affordability conditions declining, was likely due to increasing application loan amounts, which pushed up the payment to income ratio.
The 30-year fixed-rate mortgage began January at 6.16% and
The real average hourly earnings for all employees increased 0.3% from December to January, while average weekly earnings also climbed 0.5%, the Bureau of Labor Statistics found.
The index, which measures how new monthly mortgage payments vary across time relative to income, inclined 1% to 150.3 last month, but was down 9.7% on an annual basis, driven by 4% earnings growth.
The national mortgage payment increased for borrowers applying for lower-payment mortgages as well, from $1,413 in December to $1,445 in January, according to the MBA.
The index also found affordability declined in white, Black and Hispanic households month over month, with the index jumping 1.5, 1.5 and 1.4 points, respectively. Hispanic households were the most affordable with a 142.5 score on the index, followed by white households at 152 and then Black households at 155.3.
Per usual, Idaho and Nevada were the two least affordable states last month with scores of 240.8 and 219.5, respectively, while Alaska (112.8), Connecticut (113.2) and Louisiana (114.4) were the most affordable.
On the contrary, Redfin found affordability improved during the four weeks ending Feb. 22, with the median monthly housing payment in the United States down 2.6% on an annual basis to $2,599, perhaps signaling a decrease in the MBA's next monthly index report.
