Home buyer affordability—a measurement of the overall affordability of homes in certain areas compared to average income—is steadily improving in thirty-two states across the country.
The median payment applied for by applicants decreased from $1,844 to $1,839, dropping for the third consecutive month. All of this is according to the Mortgage Bankers Association’s Purchase Applications Payment Index (PAPI).
PAPI measures new monthly mortgage payments across time relative to income. Though these are modest improvements, any positives in such a volatile and unpredictable market are good signs for the future.
Key Numbers from the Affordability Index
- Monthly payments are still up by $456 in the first eight months of the year
- The states with the highest PAPI score were Idaho, Nevada, Arizona, Utah, and California. The lowest PAPI scores belonged to Washington DC, Alaska, Connecticut, Louisiana, and Oklahoma
- The national median mortgage payment is up ~$100 from this time last year
How Does Home Buyer Affordability Affect Closings?
In simple terms, better home buyer affordability boosts both sides of the coin, making it easier for buyers to afford homes and easier for sellers to find buyers. But, the affordability index is just one piece of the puzzle when it comes to the housing market. With interest rates rising, housing prices up, and demand fluctuating, these factors typically come together to determine how affordable a home really is to American families.
With such a highly fluctuating market currently, it is positive to see a statistic like affordability rising, showing signs that homes are becoming more attainable again to families following such volatile times for interest rates and home prices. But experts are keen to keep an eye on the market as these factors continue to take a toll and change things quickly.
To learn more about home buyer affordability in the Chicagoland real estate market, contact the title and escrow specialists at Plymouth Title Guaranty Corporation.