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MortgagePoint ยป Your Trusted Source for Mortgage Banking and Servicing News 48 August 2025 J O U R N A L raised the financial bar for homeown- ership, even though the housing market is more buyer-friendly this spring with more properties for sale and a record number of sellers lowering their list pric- es. Affordability pressures have increased interest in single-family rentals while reducing buyer desire. How Homebuyers Are Faring in Today's Economy In today's economy, if a buyer has $73,594 saved for a 20% down payment, they must earn about $100,000 annually to comfortably afford a median U.S. home valued $367,969. Accordingly, a median-income household would require a raise of $17,670. That same household would need a $36,287 pay boost if their savings were only sufficient for a 10% down payment. In four large metro regions, all in Cal- ifornia, median earnings would require six-figure hikes. A median-income house- hold in San Jose would require a raise of more than $250,000 to afford the average property, even if they had a staggering $330,000 saved for a 20% down payment. Additionally, median-income households in San Diego ($128,954), Los Angeles ($149,375), and San Francisco ($165,566) would require six-figure hikes. Five years ago, 39 big areas with medi- an incomes could cover the average mort- gage payment; now, there are just eleven. In the Midwest and Northeast, these are often midsize markets. Cleveland's medi- an earners, who make $11,588 more than the average home cost, have the most money to spare. Pittsburgh, St. Louis, and Cincinnati come next with $11,244, $4,897, and $4,396, respectively. The demand for single-family rentals has been increasing, tenants are getting older, and affordability barriers have become more severe for prospective first- time purchasers. Compared to multifami- ly units, which saw a 30% increase in rent, these residences now rent for 41% more than they did five years ago. Buyers are searching everywhere for a down payment to make the financing work. Over 50% of purchasers use two or more sources. Savings account for 72% of down payment money, followed by the sale of a prior residence (46%), and a gift or loan from friends or family (38%). A down payment aid module is included in Zillow home listings to help buyers know what local resources might be available to them. NEW HOME PURCHASES SURGE YOY T he Mortgage Bankers Associa- tion (MBA) Builder Application Survey (BAS) latest data for June 2025 shows that mortgage applications for new home purchases increased 8.5% year over year. Month over month, however, a different story was painted as applications decreased by 4% from May 2025. This change does not include any adjustment for typical seasonal patterns. "Applications to purchase new homes fell in June, consistent with typical seasonal patterns, but remained ahead of last year's pace," said Joel Kan, MBA's VP and Deputy Chief Economist. "A cloudier economic outlook and ele- vated mortgage rates continue to weigh on potential buyers, while growing inventory, builder incentives, and lower prices have brought some buyers back to the market. As a result, we continue to see home sales ebb and flow. MBA's estimate of new home sales increased to a sales pace of 667,000 units, up on a monthly and annual basis." According to the National Associa- tion of Realtors (NAR), home builders are showing more willingness to offer incentives, such as price reductions, credits for closing costs, and mortgage rate buy-downs, which are assisting buy- ers overcome affordability issues. Also, new-home prices are coming closer in line with the resale market. NAR reports that the median sales price of a new home was $430,700 in March, compared to $393,500 for existing-home sales. Approximately 22% of builders said they cut prices in April, with an average re- duction of 6%, according to the National Association of Home Builders/Wells Fargo Housing Market Index. "Although home prices and mort- gage rates remain high, prices have been rising more slowly, and home builders have been introducing a broader mix of smaller homes in order to bring prices within reach of more home buyers," said Gregg Logan, a Housing Analyst and Managing Director at RCLCO Real Estate Consulting. "As rates come down later this year, we expect that trend to continue." MBA reports that by product type, conventional loans comprised 50% of all loan applications; FHA loans comprised 35.1%, RHS/USDA loans comprised 1.2%, and VA loans comprised 13.8%. The av- erage loan size for new homes decreased from $379,209 in May to $376,077 in June. One major market adjustment has been uncovered in the housing invento-