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First-time buyers are facing one of the most unaffordable housing markets in U.S. history, according to data from the Mortgage Bankers Association (MBA). The group’s Purchase Applications Payment Index (PAPI) rose 0.5% in April to a record high of 172.3, as the national median mortgage payment reached $2,112, up from $2,093 the prior month, Insider reports.

Housing costs continue to outpace household income, creating, in some cases, an insurmountable barrier for younger generations to achieve homeownership. That lack of affordability is especially notable in states such as Idaho, Nevada, and Arizona, which posted PAPI readings of 255.6, 246.3, and 226.1, respectively, the highest in the country.

"For new home buyers, this is the worst situation since the end of the Great Recession," Seiler said. "Current homeowners that were lucky enough to get a 2.75% interest rate in 2022 are in a great position, but for new home buyers looking to buy a first home, or those looking to move to another home, it's a very daunting proposition."

He expects mortgage rates to fall back into the 5% range as tight inventory eases up, but when exactly that happens will depend on how the central bank opts to adjust policy over the coming months.

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