Mortgage News April 14, 2023
According to the February 2023 Black Knight Mortgage Monitor Report, home prices have experienced their first increase in seven months due to lower interest rates. However, they are still 18% lower than pre-pandemic levels, mainly because of affordability issues. Furthermore, the report states that inventory levels declined for the fifth consecutive month, reaching their lowest point since May 2022.
Home prices increased by 0.16% on a seasonally-adjusted basis, the largest gain in a year. However, the growth rate dropped below 2%, a level not seen in ten years. The Black Knight Mortgage Monitor Report projects that the annual growth rate will drop below zero percent by April on a national level. Notably, on February, 39 out of the 50 largest markets in the U.S. experienced a rise in home prices when adjusted for seasonal factors. This starkly contrasts November of the previous year when prices were falling in 48 out of 50 markets.
Black Knight’s VP of Enterprise Research, Andy Walden, noted that February saw the first positive monthly growth in home prices in eight months, with a seasonally-adjusted increase of 0.16%. The low inventory and a modest rise in demand led to an uptick in home prices in many regions of the country. On February, 39 of the 50 largest markets in the U.S. saw prices increase, in contrast to three months earlier when 48 markets were experiencing price declines. Although the national annual home price growth rate fell to 1.94%, below 2% for the first time since 2012, it may return to positive territory later this year if inventory challenges and lower interest rates persist.
The shortage of inventory causing a bottleneck in the housing market remains a concerning issue, as confirmed by the Black Knight Mortgage Monitor Report for February. Inventory levels continued to decline on a seasonally-adjusted basis, with the largest deficit since May 2022, and over 90% of markets experiencing such shortages. New listings were down 27% from pre-pandemic levels in February, adding to the supply problem. Despite rebounding to 38% of normal levels in the latter part of last year, the current active inventory for homes on sale is now 47% lower than pre-pandemic levels. Without substantial changes in interest rates, home prices, or household income, this trend is expected to persist.
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