Discover more from CalculatedRisk Newsletter
Black Knight Mortgage Monitor: Home Prices Increased Month-to-month to New Record High in June
"Pretty safe bet" that now is the "worst affordable market"
Note: Although not in Mortgage Monitor, Black Knight told me: “We haven’t yet calculated payment-to-income ratios given yesterday’s news of rates north of 7%, but it’s a pretty safe bet it’s pushed us past last October/November’s “worst affordable market” marker”
Today, the Data & Analytics division of Black Knight, Inc. (NYSE:BKI) released its August 2023 Mortgage Monitor Report, based on the company’s industry-leading mortgage, real estate and public records data sets. This month’s report looks again at the reheating housing market nationwide, with home prices hitting new peaks at the national as well as local levels, and no end in sight to the constrictive lack of for-sale inventory driving the price increases. As Black Knight Vice President of Enterprise Research Andy Walden explains, backward-looking annual home price growth rates are beginning to inflect driven by the seasonally adjusted monthly increases the Black Knight Home Price Index (HPI) has been tracking in near real time as 2023 has progressed.
“We’ve been noting for some months that the recent rate of home price gains would have a lagging, but significant, impact on the annual rate of appreciation,” said Walden. “Well, June marked that inflection point. Not only has the Black Knight HPI reached a new record high – on both seasonally adjusted and non-adjusted bases – but 60% of major markets have done so as well. After slowing for 14 straight months, the annual growth rate jumped back to 0.8% in June, up from just 0.2% in May, amid widespread growth that saw annual rates of appreciation inflect and begin to trend higher in more than 80% of markets. Rising home prices have boosted homeowner equity levels as well, which had been retreating from their 2022 highs not very long ago. In fact, despite total outstanding mortgage debt topping $13T for the first time in history, much of the decline in equity we’d tracked since last year’s peak has since been recovered.
“Overall mortgage-holder equity is now back above $16T, with some $10.5T of that being ‘tappable,’ or available for the homeowner to borrow against while still maintaining a relatively conservative 20% equity stake. The average mortgage holder has some $199K in tappable equity available to them; down somewhat from 2022’s historic highs but still a historically large amount regardless. In terms of negative equity, or ‘underwater borrowers,’ it’s a nearly nonexistent phenomenon in today’s market – just 344K homeowners currently owe more on their homes than the properties are worth. Yes, it’s true that is a 70% jump from this time last year – which may sound ominous – but everything is relative. There are less than half as many underwater homeowners than there were in 2019 before the onset of the pandemic, with only 3.9% having less than 10% equity, down from 6.6% in 2019.”
House Prices Increased in June
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 up 0.8% year-over-year.
• Home prices grew by a seasonally adjusted +0.67% in the month, slightly cooler than the +0.8% seen in May, but on par with the +0.7 and +0.69% seasonally adjusted growth in March and April
• Recent monthly gains suggest that further acceleration of annual home price growth rates are likely on the horizon
• A continuation of gains seen over the past six months (+0.6% month over month, seasonally adjusted, on average) would result in the annual home price growth rate accelerating to 2% or higher in July with further acceleration in subsequent months
• A later-than-normal peak in inventory levels, as noted on the previous page, could ease price pressures later this year, although if interest rates begin to ease, prices could heat up on what would still be chronically low inventory
Active Listings and Months-of-Inventory
Black Knight on sales, listings and months of inventory:
• Home sales declined modestly in June, falling to within 3% of January’s lows as affordability and inventory challenges continue to drag on transaction volumes
• That said, separate data from both Black Knight’s Collateral Analytics and Realtor.com showed a modest improvement in inventory for June, the second consecutive month, according to Black Knight
• Despite the improvement, inventory remains 51% below pre-pandemic levels nationally, with over half of major markets facing deficits of more than 50%
• While more than 90% of markets are still seeing inventory deficits that have grown year to date – most significantly in Phoenix (-43%) – more than two thirds of markets saw modest improvements in June
• It’s also worth noting that, in the post-pandemic world, inventories have peaked later in the year, which could provide some potential good news for those looking for more options over the next few months
Mortgage Delinquencies Increased Slightly in June
Here is a graph on delinquencies from Black Knight. Overall delinquencies increased slightly in June, and are just above the record low in March.
• The national delinquency rate inched up 2 basis points (bps) in June to 3.12%, remaining near record lows
• Borrowers a single payment past due increased by 19K (2.2%), while borrowers who have missed two payments ticked up by 5K (1.7%)
• Serious delinquencies – those 90+ days past due – dropped 13K to 471K, the lowest they've been since August 2006, and a 177K improvement from June 2022
There is much more in the mortgage monitor.
CalculatedRisk Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.