Black Knight Mortgage Monitor: "Early signs of cooling in the housing market"

"Affordability is at its worst point since the mid-1980s"

Black Knight publishes a monthly Mortgage Monitor report that contains interesting information on the mortgage market and housing.

Press Release: Black Knight: Signs of Cooling in Nation's Least Affordable Markets as Inventory Levels Improve; May Sees Largest Monthly Slowdown in Home Price Growth Since 2006

Today, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company's industry-leading mortgage, real estate and public records datasets. This month’s report looks at recent cooling in the annual rate of home price appreciation and the intertwined impacts of both affordability and inventory on those trends. According to Black Knight Data & Analytics President Ben Graboske, May marked the second consecutive month of cooling at the national level.

“The annual home price growth rate fell by more than a full percentage point in May, the largest monthly decline at the national level since 2006,” said Graboske. “However, even with growth slowing in 97 of the top 100 U.S. markets, overall home prices still rose 1.5% from April – nearly twice the historical average for the month of May. And while any talk of home values and 2006 might set off alarm bells for some, the truth is that price gains would need to see deceleration at this rate for more than 12 months just to get us back to a ‘normal’ 3-5% annual growth rate. That said, the pace of deceleration could very well increase in the coming months, as we’ve already begun to see in select markets such as Austin, Boise and Phoenix.
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Mortgage Delinquencies at Record Lows

Here is a graph on delinquencies from Black Knight. Overall delinquencies are at record lows.

• The national delinquency rate fell five basis points to 2.75% in May, continuing the downtrend of the prior two months and marking another new low

• Following declines in March, a slight, seasonally typical increase in 30-day delinquencies was offset by continued improvements in serious delinquencies

House Price Growth was Strong in May, but Slowing

The second graph shows Black Knight’s estimate of monthly house price increases and the year-over-year change in prices.

• Annual home price appreciation fell to 19.3% from a revised 20.4% in April, marking the largest single-month deceleration since 2006

• Even so, prices rose 1.5% month over month – nearly twice the historical average for May

• Home prices are up 10.8% year to date, and 44% since the start of the pandemic

National Payment to Income Ratio; Housing Least Affordable Since 1980s

Note: Black Knights data on affordability goes back to 1975.

And on the payment to income ratio:

• With 30-year rates hovering close to 6% and home prices up nearly 11% since the start of 2022, affordability is at its worst point since the mid-1980s – when sharp Fed hikes led to high double-digit mortgage rates that resulted in a greater than 50% payment-to-income ratio

• The affordability challenge back then was almost entirely driven by the interest rate environment, while incomes largely kept up with home price growth

• As of mid-June 2022, it takes 36.2% of the median household income to make the mortgage payment on the average priced home purchase, well above the 34.1% post-1980s peak in July 2006

• The monthly principal and interest (P&I) payment for the average-priced home purchased with 20% down is now over $2,100 for the first time on record, up nearly $750 (55%) so far this year and nearly 2X the $1,089 required at the beginning of the pandemic

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There is much more in the mortgage monitor. For example, Black Knight also has data on the status of mortgage loans that were in forbearance - and also data on house prices to median income (at all time high).