In spite of the improved income growth, Edward Seiler, associate vice president and executive director at the MBA, said it still wasn’t fast enough to keep pace with rising house prices and mortgage rates.
“Low unemployment has spurred strong income growth in early 2022, but homebuyer affordability has decreased due to the quick rise in mortgage rates amid steep home-price growth,” Seiler said. “The 30-year fixed-rate mortgage spiked 73 basis points from December 2021 through February 2022. Together with increased loan application amounts, a mortgage applicant’s median principal and interest payment in February jumped $127 from January and $337 from one year ago.”
The national PAPI increased 8.3% to 146.3 in February from 135.1 in January, meaning payments on new mortgages took up a larger share of a person’s income. The figures jumped 21.9% higher compared to the same period in 2021.
Across the states, Idaho, Nevada and Arizona had the highest PAPI scores above 190, while Washington, Connecticut and Alaska had the lowest below 95.