- The seasonally adjusted Black Knight Home Price Index (HPI) hit
a new record high in May, with the pullback in prices late last
year having now fully reversed itself
- Twenty-seven of the 50 largest markets – primarily in the
Midwest and Northeast – have returned to their prior home price
peaks, or set new highs this spring
- Marking the fifth consecutive month of gains, May's 0.7%
seasonally adjusted monthly increase equates to an annualized
growth rate of 8.9%, suggesting a coming inflection in annual home
price appreciation (HPA)
- As of May, annual home price growth sat at 0.1%; however, if
recent trends hold true, that annual home price growth rate may
turn and begin trending higher as early as next month
- For-sale inventory improved modestly but is still 51% off
pre-pandemic levels and remains a massive challenge, putting upward
pressure on home prices despite Fed attempts to cool the market via
higher rates
- Inventory levels have decreased in 95% of major markets this
year, with the largest swings in Western locales such as
Phoenix; Boise, Idaho; Ogden,
Utah; San Francisco and
Colorado Springs, Colo.
- Each of these metros had moved into inventory oversupply late
last year as sales dried up, but have since swung back more than 30
percentage points year-to-date as compared to pre-pandemic
levels
- Affordability continues to suffer; as of June 22, with 30-year rates at 6.67%, the
principal and interest (P&I) payment needed to buy the
median-priced home rose to $2,258,
marking the highest payment on record
- Nationally, it takes 35.7% of median household income to make
the average P&I payment; only income growth since fall of 2022
has kept May 2023 from being the most
unaffordable month for housing in the past 37 years
JACKSONVILLE, Fla., July 10,
2023 /PRNewswire/ -- Today, the Data &
Analytics division of Black Knight, Inc. (NYSE:BKI) released its
latest Mortgage Monitor Report, based on the company's
industry-leading mortgage, real estate and public records data
sets. As the nation approaches the traditional end of the spring
homebuying season, there are distinct signs of market reheating –
almost universally in markets across the
United States. As Black Knight Vice President of Enterprise
Research Andy Walden explains, five
consecutive months of gains have completely reversed the pullback
in home prices that began in July
2022.
"There is no doubt that the housing market has reignited from a
home price perspective," said Walden. "Firming prices have now
fully erased the pullback we tracked through the last half of 2022
and lifted the seasonally adjusted Black Knight HPI to a new record
high in May. Though the backward-looking annual growth rate dipped
to 0.1%, May's exceptionally strong +0.7% month-over-month gain
would equate to an annualized growth rate of 8.9%, suggesting the
annual home price growth rate would remain at or near 0% for only a
short time before inflecting and trending sharply higher in coming
months. The reheating is widespread, with more than half of the 50
largest U.S. markets seeing prices at or above 2022 peaks. While
prices are still well below peak levels across the West and in many
pandemic boom towns, price firming in recent months has begun to
close those gaps. Austin, Texas,
remains the notable exception; inventory there continues to run
above pre-pandemic levels, putting downward pressure on prices,
which have fallen to -13.8% below peak, the largest gap of any
market. Just eight of the top 50 markets are currently more than 5%
below their 2022 peaks.
"Unlike Austin, for-sale inventory is moving the other direction
in much of the country. Active listings have deteriorated in 95% of
major markets so far this year and, overall, we're still down more
than 50% from pre-pandemic levels. New construction starts and
completions were both strong in May, which is welcome news.
However, most projects underway in the month were 5+ multi-family
units, as opposed to single-family residential (SFR) units. SFRs
made up just 40% of the total and is now at construction levels
still approximately -30% below the 2005 peak. As it stands, housing
affordability remains dangerously close to the 37-year lows reached
late last year, despite the Federal Reserve's attempts to cool the
market. The challenge for the Fed now is to chart a path forward
toward a 'soft landing' without reheating the housing market and
reigniting inflation. But the same lever used to reduce demand –
that is, raising rates – has not only made housing unaffordable
almost universally across major markets, it has also resulted in
significant supply shortages by discouraging potential sellers
unwilling to list in such an environment, further strengthening
prices. At this point, even if rates come down, but not so sharply
as to entice potential sellers out of their sub-3.5% mortgages, it
could risk a widespread reheating of home prices across the
U.S."
Digging deeper into the Black Knight HPI data for May, this
month's report looks at the significant degree to which many
Western markets – which had been seeing sharp declines in 2022 –
have begun to reheat this spring. San
Jose, Calif., is a noteworthy example; homes in the metro
shed 10% of their home value faster than any market on record last
year. Now, with inventory levels beginning to plummet again, prices
are reheating and at +1.4% in May, San
Jose experienced the second largest month-over-month price
gains of any market on a seasonally adjusted basis. San Jose is not alone among western markets;
San Diego (+1.1%), Los Angeles (+1.0%), San Francisco (+.9%), Seattle (+.9%), and Sacramento, Calif., (+.8%) all experienced
exceptional home price growth in May as well. Hartford, Conn. (+1.6%) – which faces a
combination of relative affordability, strong demand, and the
deepest inventory deficit of any U.S. market (-82%) – continues to
lead price growth overall.
Much more information on these and other topics can be found in
this month's Mortgage Monitor.
About the Mortgage Monitor
The Data & Analytics division of Black Knight manages the
nation's leading repository of loan-level residential mortgage data
and performance information covering the majority of the overall
market, including tens of millions of loans across the spectrum of
credit products and more than 160 million historical records. The
combined insight of the Black Knight HPI and Collateral Analytics'
home price and real estate data provides one of the most complete,
accurate and timely measures of home prices available, covering 95%
of U.S. residential properties down to the ZIP-code level. In
addition, the company maintains one of the most robust public
property records databases available, covering 99.9% of the U.S.
population and households from more than 3,100 counties.
Black Knight's research experts carefully analyze this data to
produce a summary supplemented by dozens of charts and graphs that
reflect trend and point-in-time observations for the monthly
Mortgage Monitor Report. To review the full report, visit:
https://www.blackknightinc.com/data-reports/
About Black Knight
Black Knight, Inc. (NYSE:BKI) is an award-winning software, data
and analytics company that drives innovation in the mortgage
lending and servicing and real estate industries, as well as the
capital and secondary markets. Businesses leverage our robust,
integrated solutions across the entire homeownership life cycle to
help retain existing customers, gain new customers, mitigate risk
and operate more effectively.
Our clients rely on our proven, comprehensive, scalable products
and our unwavering commitment to delivering superior client support
to achieve their strategic goals and better serving their
customers. For more information on Black Knight, please visit
www.blackknightinc.com/.
For more
information:
|
|
Michelle Kersch
|
Mitch
Cohen
|
904.854.5043
|
704.890.8158
|
michelle.kersch@bkfs.com
|
mitch.cohen@bkfs.com
|
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SOURCE Black Knight, Inc.