Black Knight: Homebuying Means High Rates and Prices, Low Inventory, Tight Credit


According to the latest Mortgage Monitor Report from the Data & Analytics division of Black Knight Inc., the spring homebuying season is defying historical norms, as challenges facing homebuyers – and the real estate and housing finance industries – become more deeply entrenched.

The report, based on the company’s mortgage, real estate and public records data sets, examines the intersection of affordability, inventory, demand and credit availability. 

“In a sense, the gridlocked housing market has been feeding on itself,” says Black Knight vice president of enterprise research Andy Walden. “While elevated interest rates continue to weigh on both affordability and demand, they’re simultaneously constricting supply as well as would-be sellers who locked in ultra-low rates early in the pandemic and continue to sit on the sidelines. The combination of lower supply and demand in April led to both slowing sales and firming prices.” 

Walden also notes that signs of tightening credit availability have begun to appear, adding to the mounting obstacles. The report shows lenders are increasing their average credit score and down payment requirements for a homebuyer to qualify for a mortgage. April purchase credit scores were the highest on record, dating back to 2000, when Black Knight first began to track the metric. 

In what would typically be the heart of the homebuying season, pullbacks in purchase rate lock volumes have persisted, adds Walden, dropping 11% from the week ending March 25 to the week ending May 20. Indeed, purchase locks have sunk to more than 30% below pre-pandemic levels, after pulling to within 15% on rate dips in mid-January and mid-March. 

“Demand is obviously suffering,” Walden says. “The fact that this spring’s strengthening home prices have erased more than 60% of the ‘correction’ seen late last year isn’t likely to help much on that front.”

Photo by Olivier Lance on Sunsplash.

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