New York's Mortgages Are Cheaper Than Most

A sign advertising a home for sale is displayed outside of a Brooklyn brownstone on April 11, 2024 in New York City. Homebuying affordability improved in May in the state, according to lenders.

Mortgages in New York are some of the more affordable in the country in relation to the income of state residents, data from the Mortgage Bankers Association (MBA) shows.

The MBA's Purchase Applications Payment Index (PAPI), which tracks how monthly mortgage payments shift in relation to income, showed that New York recorded in May one of the lowest measurements in the country behind only Connecticut and Louisiana.

The Empire State registered a PAPI of 132.2, with Louisiana leading the country at 127.4, followed by Connecticut at 131.4. Completing the top five list of states with low PAPI scores were Alaska and West Virginia. A low PAPI suggests improved affordability, where either loan application amounts drop, mortgage rates decline or incomes go up, according to the MBA.

On the other end, states with high PAPI scores included Idaho, Nevada, Arizona, Florida and Rhode Island.

The revelation comes at a time when mortgage rates have been easing after hovering above the 7 percent range for weeks. Recently, the cost of a home has averaged just under that, suggesting that buyers could start to see their prospects for buying a home improve.

The MBA's data revealed that the national median payment for a mortgage dropped slightly to $2,219 last month, a decline of close to $40 from April.

"Homebuyer affordability conditions improved in May as slightly lower mortgage rates and an uptick in housing inventory slightly eased the recent rise in application payment amounts," said Edward Seiler, the MBA's associate vice president, housing economics, and executive director of the Research Institute for Housing America, in a statement.

"MBA is forecasting for mortgage rates to fall closer to 6.5 percent by the end of the year, which along with rising inventory levels and a subsequent slowdown in home-price growth should help affordability," Seiler said.

Despite improved affordability, New York's housing market shows that challenges still exist.

In May, sales declined by more than 4 percent, compared with the same time a year ago, even as listings of properties available to buy ticked up 2.1 percent, according to the New York State Association of Realtors. That increase did not entirely improve the inventory of homes in the market, which fell by close to 11 percent last month to about 26,000 across the state. At the same time, the median sale price was up 8.3 percent to $422,500.

But New York residents have seen their earnings improve. Wages and salaries accelerated at a pace of 4.2 percent on a yearly basis as of March, according to a May update from the U.S. Bureau of Labor Statistics.

The average salary in the state was close to $52,000, according to jobs platform ZipRecruiter, with most pay ranging between $36,300 and $64,250 a year.

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