The Data & Analytics division of Black Knight Inc. has released its latest Mortgage Monitor Report. As the nation approaches the traditional end of the spring homebuying season, distinct signs of market reheating are appearing – almost universally in markets across the United States.
Andy Walden, Black Knight vice president of enterprise research, explains that five consecutive months of gains have completely reversed the pullback in home prices that began in July 2022: “The reheating is widespread, with more than half of the 50 largest U.S. markets seeing prices at or above 2022 peaks. Austin, Texas, remains the notable exception; inventory there continues to run above pre-pandemic levels, putting downward pressure on prices. Just eight of the top 50 markets are currently more than 5% below their 2022 peaks.
“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,” adds Walden. “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.”
More specific findings of the Mortgage Monitor Report:
- 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.
- 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.
- 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.
- 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.
Photo by Bailey Anselme on Unsplash.
