ICE Mortgage Monitor: Annual home price growth eased in March
"For-sale inventory has been growing sharply across Florida"
Press Release: ICE Mortgage Monitor: Historically Strong Home Price Growth Pushes U.S. Mortgage Holders’ Tappable Equity to Record $11T
Though rising rates have dampened purchase demand and allowed for modest inventory growth, a continuing deficit of homes for sale this spring is helping prices remain resilient
According to the ICE Home Price Index, prices rose 1.2% in March, more than 25% above the 25-year average increase, marking the third consecutive month of above-average home price gains
On an annual basis, home price growth eased slightly in March to +5.6% from an upwardly revised +6.0% in February
Strong home price growth in early 2024 increased mortgage-holder equity to a record $16.9T in Q1, $11T of which can be leveraged while retaining a 20% equity cushion – also an all-time high
48M U.S. homeowners with mortgages have some level of such tappable equity, at an average of $206K per borrower, up from $185K at the same time last year
Two thirds of all tappable equity is held by homeowners with credit scores of 760 or higher, making for a relatively low-risk lending cohort
An equal share – two thirds – is held by homeowners with first lien mortgage rates below 4%, with 84% (~$9.2T) held by those with rates lower than 5%
Just five West Coast metros – Los Angeles ($1.1T), San Francisco ($648B), San Jose ($348B), San Diego ($331B), and Seattle ($324B) – account for nearly a quarter ($2.7T) of total tappable equity
Homeowners in these markets not only hold some of the largest volumes of tappable equity but also have rates well below the national average as higher loan balances tend to provide more frequent refi incentive
Second lien home equity products remain particularly attractive options for such borrowers wanting to access some of this abundant equity while maintaining their historically low first lien rates
Though U.S. home price growth slowed modestly on an annual basis, according to the ICE Home Price Index, March marked the third consecutive occurrence of above-average monthly gains. Rising prices combined with higher interest rates have added to the affordability pressure on prospective homebuyers. Existing homeowners, on the other hand, continue to reap the benefits of historically strong price gains. Andy Walden, ICE’s Vice President of Enterprise Research Strategy, explains.
"The recent trend of rising interest rates has dampened homebuyer demand and allowed the inventory of homes for sale to improve,” said Walden. “We’re still very much in a hole from an inventory perspective, but that deficit has fallen from 50% a year ago to 38% in March. Today, with 3.3 months of supply, inventory is still historically low and indicative of a seller’s market. This is helping to keep home price growth resilient even though demand is down. In fact, despite some minor slowing, March marked the third consecutive month of stronger than average growth.”
emphasis added
Mortgage Delinquencies Decreased in March
Here is a graph on delinquencies from ICE. Overall delinquencies decreased in March and are below the pre-pandemic levels.
• The national delinquency rate ticked down 14 basis points (bps) to 3.20% in March, holding 27 bps higher than the record low in March 2023
• April, which typically experiences an uptick in delinquencies, may fare better this year, as March delinquencies came in higher than normal due to the month having ended on a Sunday
• Serious delinquencies (loans 90+ days past due but not in active foreclosure) dropped 24K (-5.2%) from February to their lowest level since June 2006
• March saw less inflow of past-due payments as well as fewer rolls to later stages of delinquency, with total cures up 9%, as early-, mid- and late-stage delinquencies all saw improvement
Deficit / surplus of homes listed for sale
The local data I track is indicating that Florida and Texas inventory is above normal, whereas inventory is still low in most of the country.
• After turning deeper to start the year, the national for-sale inventory deficit modestly improved in March with the number of homes for sale now 38% below the 2017-2019 same month average, up from -40% the month prior
• While new listings continue to run at a 20% deficit from the 2017-2019 same-month averages, that’s a slight improvement from January’s 24% deficit and the 31% deficit a year ago
• More than 70% of market inventory deficits improved in March, with Lakeland, FL (+10 pp), Phoenix (+10 pp), AZ and Denver, CO (+9 pp) seeing the largest single month improvements
• Ten of the 100 largest U.S. markets, concentrated in three states, now have a volume of existing homes for sale at or above pre-pandemic averages; in Florida ̶ Lakeland, Palm Bay, Deltona and Cape Coral); in Texas ̶ San Antonio, Austin, Dallas and McAllen; and in Colorado ̶Denver and Colorado Springs
• For-sale inventory has been growing sharply across Florida over the past 12 months, with inventory in Lakeland, Palm Bay, Deltona and Cape Coral now back above pre-pandemic levels, and inventory in North Port, Tampa, Orlando and Jacksonville within 10% of 2018/2019 levels
• On the other end of the spectrum, Connecticut is experiencing the deepest inventory deficits with Hartford (-82%), Bridgeport (-80%) and New Haven (-78%) at less than a quarter of the active listings typical for this time of year, while in Albany (-74%), Springfield (-73%), Providence (-71%) and Allentown (-70%) deficits are largely holding firm or worsening from the same time last year
“Annual home price growth eased in March”
Here is the year-over-year in house prices according to the ICE Home Price Index (HPI). The ICE HPI is a repeat sales index. Black Knight reports the median price change of the repeat sales. The index was up 5.6% year-over-year in March, down from 6.0% YoY in February.
• Home price growth slowed in March, driven by a tightening of both mortgage rates and home affordability, but continues to remain historically strong
• Annual home price growth eased from an upwardly revised 6.0% in February to +5.6% in March, with prices rising by a seasonally adjusted +0.42% in the month, down from a revised +0.58% in February
• On a non-adjusted basis, prices were up +1.2% in March, more than 25% above the 25-year March average of +0.96%
• March marked the third straight month of above average monthly growth, after monthly gains fell below the 25-year average in five of the final six months of 2023, dampened by elevated interest rates
• While rising interest rates suppressed purchase demand and allowed modest inventory growth this spring, prices have remained resilient so far
• That said, adjusted monthly growth continuing at or near its currently rate would result in modestly slowing annual home price growth as we move into summer
There is much more in the mortgage monitor.