National homebuyer affordability improved modestly in August, driven by a decline in purchase loan amounts that offset higher mortgage rates. According to the Mortgage Bankers Association’s Purchase Applications Payment Index, the national median monthly payment applied for by purchase applicants fell to $2,162 in August from $2,175 in July.
August 2026 Mortgage Affordability and Index Trends
The national PAPI decreased 0.6% to 154.3 in August, down from 155.2 in July. An increase in the index indicates a higher mortgage payment-to-income ratio and declining affordability, while a decrease signals that borrowing conditions have improved through lower loan amounts, reduced rates, or stronger earnings.
“Homebuyer affordability improved slightly in August, as a decline in the median purchase loan amount helped offset the impact of higher mortgage rates,” said Edward Seiler, the Mortgage Bankers Association’s associate vice president of housing economics and executive director of the Research Institute for Housing America. Seiler noted that affordability also improved compared to the prior year because earnings growth outpaced the increase in monthly mortgage payments.
Annual Comparison: Earnings Growth Outpaces Payment Increases
On an annual basis, national mortgage payments rose 2.9%, adding $62 to the median monthly cost compared to August 2025. However, household earnings increased by 4.1% over the same 12-month period. This stronger wage growth pushed the annual PAPI down by 1.1%, signaling a net gain in purchasing power for buyers over the year.
Despite the national monthly dip, conditions remain mixed across the country. Data from the Mortgage Bankers Association shows that 27 states experienced a decline in housing affordability during August. Mortgage trends varied significantly by loan type:
- Conventional Loans: The national median mortgage payment for conventional loan applicants rose to $2,188 in August, up from $2,184 in July and $2,112 in August 2025.
- FHA Loans: The national median mortgage payment for FHA loan applicants fell to $1,856 in August, dropping from $1,901 in July and $1,863 a year prior.
- Builder Purchases: The median mortgage payment for purchase mortgages tracked in the Builder Application Survey edged up to $2,214 in August from $2,210 in July.
- Lower-Payment Mortgages: For purchasers in the 25th percentile, the nationwide mortgage payment dropped from $1,512 in July down to $1,492 in August.
State Variations and Demographic Shifts
Geographic disparities in the housing market remained stark in August. Idaho (258.6), Nevada (229.8), Rhode Island (213.7), Arizona (204.0), and Tennessee (193.5) made up the top five states possessing the highest PAPI readings, which denote the most difficult affordability conditions. Conversely, the states and districts with the lowest PAPI figures were the District of Columbia (113.9), Louisiana (114.2), West Virginia (120.8), Connecticut (124.5), and New York (125.3).
Affordability metrics also improved across several demographic groups between July and August:
- Black Households: The national PAPI decreased from 155.8 in July to 154.9 in August.
- Hispanic Households: The national PAPI decreased from 143.6 in July to 142.7 in August.
- White Households: The national PAPI decreased from 157.9 in July to 157.0 in August.
Looking ahead, market participants note that sustained progress will require broader economic adjustments. “Meaningful and sustained improvements in affordability will depend on a combination of lower mortgage rates, continued income growth, and moderating home-price growth,” Seiler stated.
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