February's low mortgage rates, when the 30-year fixed fell below the 6% mark, helped to improve homebuyer's ability to afford the payments on their purchase, the Mortgage Bankers Association found.
During the month, lenders were offering loans priced under 6%, with the industry average at 5.98% for the week of Feb. 26, according to Freddie Mac.
As a result, the MBA's Purchase Applications Payment Index was $2,061 for February, down from $2,070 in January. But it is a very significant $144 lower when compared with February 2025, when the PAPI was $2,205.
The PAPI declined month-to-month even though loan sizes did increase slightly, while the change versus a year ago is a reflection of reduced borrower payments and income growth, said Edward Seiler, MBA's associate vice president of housing economics and executive director of the Research Institute for Housing America.
"While affordability conditions remain challenging in many markets, these incremental gains — felt across more than half of states — are an encouraging sign for prospective buyers, particularly those seeking lower-payment options," Seiler said in a press release.
However, mortgage rates have been climbing in March, a direct result of investors' reaction to rising oil prices as a result of the Iran conflict.
The MBA's Weekly Application Survey released on Wednesday put the 30-year conforming fixed at 6.43%, a five month high and a gain of 13 basis points from seven days prior.
It is quite likely the PAPI, which besides the MBA's rate tracker also includes the weekly earnings data from the U.S. Bureau of Labor Statistics' Current Population Survey, will show a drop in affordability in March and beyond.
"Unfortunately, this month's turmoil in the Middle East has put upward pressure on mortgage rates, which in turn could impact overall affordability in the months ahead," Seiler said.
Meanwhile, ATTOM Data Solutions found that home prices in 97% of the counties it had enough data to analyze were higher than the historical average for the first quarter.
This is actually an improvement over the 98% level for the fourth quarter as well as for the first quarter of last year.
The national median home price has risen by 8% since the first quarter of 2024, to $360,000 from $333,438. Meanwhile, average weekly wages have increased by 6.4% through the third quarter of 2025, which is the latest BLS data.
"Over the last several years, wages haven't kept up with rising home prices in many markets," said Rob Barber, ATTOM CEO, in a press release. "Mortgage rates dropped throughout last year, which offset some of that growing affordability gap, but shifts in the broader economic environment can still influence rates and home purchasing power."
