The median monthly payment for new home loans climbed up 2.5% between March and April to $2,256 from $2,201, according to the Mortgage Bankers Association. Compared to April 2023, when the median came in at $2,112, the monthly amount finished 6.8% higher.
The uptick in monthly costs came during a period when 30-year mortgage rates
"Home buyer affordability conditions declined further as mortgage rates remained above 7% in April, sidelining many prospective buyers from entering the housing market," said Edward Seiler, MBA's associate vice president, housing economics, and executive director, Research Institute for Housing America, in a press release.
"In addition to lower mortgage rates, more housing inventory is desperately needed in markets throughout the country this summer to alleviate these tough affordability conditions."
The MBA's monthly Purchase Applications Payments Index, which measures affordability based on monthly housing costs relative to income, finished April higher by 1.5% with a score of 176.8 compared to the previous month's 174.2. A bump in earned wages helped offset some of the impact of prices and interest rates, MBA said. An increase in the PAPI indicates declining borrower affordability.
"Continued home price resiliency amid surging borrowing costs highlights headwinds for the housing market reflected in slow sales activity, namely affordability challenges for potential homebuyers as cost of homeownership continue to skyrocket," said Corelogic Chief Economist Selma Hepp in a statement last week.
The latest data, though, does not measure the effect of more recent interest rate movements, which trended downward in May. While volatile mortgage rates have contributed to the sluggish and uncertain housing market, several housing researchers,
"Buyers are maintaining the wait-and-see approach in anticipation of lower rates," Hepp said.
Monthly payment amounts increased across the board among groups and price tiers measured by MBA. For new loans with monthly payments in the lowest 25%, the median increased to $1,537 in April from $1,488 in March, up by 3.3%.
Meanwhile, borrowers for newly built constructions saw payments rise to $2,604 from $2,556, a 1.9% increase.
Among loan types, payments for Federal Housing Administration-backed mortgages increased 3% month-to-month to $1,955 from $1,898. Compared to April 2023, the median surged 11.7% from $1,750.
Conventional borrowers saw median payments rise 2.2% to $2,272 from $2,222 in March. On a year-over-year basis, the amount was 4.7% higher from $2,170 in April 2023.
Western states topped the list, with the highest PAPI readings, or the worst levels of affordability. Idaho came in with a score of 267.2, followed by Nevada and Arizona at 264.9 and 236.4, respectively.
On the other end of the spectrum, Alaska ranked highest when it came to affordability, with a a PAPI reading of 131.6. It was followed by Louisiana at 134.1 and Connecticut at 134.2.
