Black Knight Mortgage Monitor: Home Prices Increased Month-to-month in April; Prices Unchanged YoY

Credit Tightening: "April purchase credit scores were the highest on record"

Press Release: Black Knight: Tightening Credit Availability Adds to Affordability Struggles as Rates Remain Elevated, Inventory Shortages Worsen and Home Prices Strengthen

Today, the Data & Analytics division of Black Knight, Inc. (NYSE:BKI) released its latest Mortgage Monitor report, based on the company’s industry-leading mortgage, real estate and public records data sets. With the spring homebuying season defying historical norms, this month’s report looks at the intersection of affordability, inventory, demand and credit availability. As Black Knight Vice President of Enterprise Research Andy Walden explains, the challenges facing homebuyers – and the real estate and housing finance industries more widely – are only becoming more deeply entrenched as the months go on.

“In a sense, the gridlocked housing market has been feeding on itself,” said 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. In fact, while home sales dipped, April marked the fourth consecutive month of home price gains, which are now almost universally rising across the country again on a seasonally adjusted basis. Only Austin, Texas – the sole market where inventory is back above pre-pandemic levels – is still seeing meaningful price corrections continuing into the spring. In today's market, interest rates are acting as a double-edged sword, reducing or increasing both demand and supply as they rise and fall, making it challenging to find a rate-driven path to easing affordability and home prices.

“Amidst all of this, we’re also beginning to see clear signs of tightening credit availability. Our Optimal Blue rate lock data shows that average credit scores and down payments are on the rise, with tightening credit compounding the significant challenges already facing potential home buyers and the origination market alike. According to our McDash loan-level mortgage performance dataset, April purchase credit scores were the highest on record, dating back to 2000, when Black Knight first started tracking the metric. Pullbacks in purchase rate lock volumes have continued, dropping 11% from the week ending March 25 to the week ending May 20, in what would typically be the heart of the homebuying season. Indeed, purchase locks have fallen back down 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, and 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.”
emphasis added

House Prices Increased in April

Note: The Black Knight House Price Index (HPI) is a repeat sales index. Black Knight reports the median price change of the repeat sales.

Here is a graph of the Black Knight HPI. The index is still up 1.0% year-over-year and will likely turn negative YoY soon.

• April’s 0.46% seasonally adjusted rise was down from March’s revised +0.62% and roughly on par with the 0.49% rise in February

• April’s seasonally adjusted increase was near the 30-year average of 0.48% for the month – 5.5% annualized

• Despite prices firming up this spring, the annual home price growth rate slipped to 0% in April, the first-time prices have been flat year over year since the rebound from the Great Financial Crisis began in 2012

• At its current trajectory, the annual home price growth rate would only fall modestly below 0% for a very short time before pulling back above water by late Q2/early Q3

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Mortgage Delinquencies Increased in April

Here is a graph on delinquencies from Black Knight. Overall delinquencies are up from the record low set in March, mostly due to timing issues.

• At 3.31%, the national delinquency rate increased 39 bps in April, up 2.1% year over year

• Delinquencies were driven primarily by a 200K increase in the number of borrowers 30-days late, consistent with an average 25% bump in 30-day delinquencies for previous Aprils that have ended on a Sunday

There is much more in the mortgage monitor.