Home price appreciation slowed during the three months ended in May, Black Knight’s Mortgage Monitor report shows.
According to the report, two-thirds of both states and large metropolitan areas saw slowdowns in rates of home price appreciation during the three-month period.
However, that does not mean that home prices are falling – just that the rate of appreciation is slowing.
“In May – typically one of the strongest months of the year for home price growth – every state in the nation saw home prices increase,” says Ben Graboske, executive vice president of Black Knight’s data and analytics division, in a statement. “However, the average monthly gain in value of less than one percent was the lowest for any May in the last four years.”
The average monthly gain for the three months ended in May was 0.93%, according to the report.
“Thirty-two states, as well as 33 of the 50 largest metropolitan areas, have experienced slowdowns in appreciation over the same period,” Graboske says. “All that said, the annual rate of home price growth is still historically high at 6.3 percent, some 2.5 percentage points above long-term norms.
“For more than six years, we’ve been riding a wave of home price appreciation above the 25-year average,” he adds. “The question now is whether tightening affordability will end that streak and if more deceleration is on the horizon.”
Graboske says the cooling of home price gains and flattening of mortgage interest rates in recent months has had the effect of stabilizing affordability.
“As rates have ticked down from 4.66 percent in late May to 4.52 percent in mid-July, the monthly principal and interest payment to purchase the average home has only increased by $4 per month – significantly less compared to the $138 per month increase we saw over the first five months of 2018,” he says. “Still, the $1,213 in principal and interest per month needed to buy the average home remains near a post-recession high. While that represents a nearly $500 per month increase from the bottom of the market in 2012, it’s important to keep in mind that it’s still roughly 13 percent less than was required back in 2006.”
Although home price appreciation is slowing overall, there are still certain markets that are red hot.
According to the report, although 32 states saw home price gains slow, 18 picked up speed, with California seeing three times the national average deceleration.