Homebuyer affordability improved in March, with the national median payment applied for by purchase applicants dropping to $2,173 from $2,205 in February, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI).

“Homebuyer affordability conditions improved slightly in March as lower mortgage rates spurred renewed activity in the housing market,” said MBA Associate Vice President Housing Economics Edward Seiler, who is also executive Director of the Research Institute for Housing America. “Despite improving conditions in March, the outlook in the upcoming months is cloudier. Ongoing affordability concerns, declining consumer confidence, and volatility in the financial markets could all put downward pressure on homebuyer demand.” 

 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 decreased to 164.1 in March from 166.5 in February. Median earnings were up 4.8 percent compared with a year ago, and while payments decreased 1.3 percent, the significant earnings growth means that the PAPI is down (affordability is higher) 5.8 percent on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to from $1,506 to $1,499 month-over-month.

The Builders’ Purchase Application Payment Index showed the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey decreased from $2,463 in February to $2,288 in March.

Additional findings of MBA’s March PAPI include:

• The national median mortgage payment in March was down by $28 from one year ago, equal to a 1.3 percent decrease.
• The national median mortgage payment for FHA loan applicants was $1,872 in March, down from $1,907 in February and $1,898 in March 2024.
• The national median mortgage payment for conventional loan applicants was $2,200, down from $2,226 in February and $2,222 in March 2024.
• The top five states with the highest PAPI were: Idaho (245.6), Nevada (242.6), Arizona (221), Florida (204.2), and Utah (203.5).
• The top five states with the lowest PAPI were: Louisiana (125.1), Connecticut (125.4), Washington, D.C. (128.8), New York (129.1), and West Virginia (130.3).
• Homebuyer affordability increased for Black households, with the national PAPI decreasing from 164.2 to 161.8 month-over-month.
• Homebuyer affordability increased for Hispanic households, with the national PAPI decreasing from 157.8 to 155.5 month-over-month.
• Homebuyer affordability increased for White households, with the national PAPI decreasing from 168.2 to 165.7 month-over-month.