By: Jann Swanson
Wed, May 3 2023, 1:32 PM
While home prices continue to fall on an annual basis, new data from Black Knight indicates that the trend may not continue beyond the short term. The company’s March Mortgage Monitor shows its seasonally adjusted Home Price Index (HPI) rose 0.45 percent in March (the largest increase since last May) and was up 1.38 percent before adjustment. The latter number is roughly on par with the 10-year March average of 1.43 percent, typically the strongest monthly uptick each year. Further, revisions to the January and February HPI numbers show monthly gains of 0.13 percent and 0.43 percent making March the third consecutive month of gains. The company warns that these monthly increases would annualize to gains of more than 10 percent and make it important to watch for further heating in coming months.
Black Knight’s Vice President for Research Strategy, Andy Walden, says, “Despite the home price strengthening of these past couple of months, the backward-looking annual growth rate continued to cool as the influence of the red-hot spring 2022 market fades in the rearview mirror. Prices are now up just 1.0 percent year over year, with the annual growth rate on track to fall to roughly 0 percent by April.” That annual metric has been falling by 1.3-1.4 percent each month since the start of 2023.
The only markets in the top 50 by population where seasonally adjusted prices are still shrinking are Austin, Salt Lake City, and San Antonio. Phoenix and Dallas were effectively flat month-over-month. The largest price gains have occurred in the Midwest and Northeast.
Driving the recent price gains is the inventory shortage that’s been plaguing the housing market for some time. Walden said, “A modest bump in homebuyer demand ran headlong into falling for-sale supply. Just five months ago, prices were declining on a seasonally adjusted month-over-month basis in 92 percent of all major U.S. markets. Fast forward to March, and the situation has done a literal 180, with prices now rising in 92 percent of markets from February.
“Our Collateral Analytics data showed the supply of active listings fell for the sixth straight month, to the lowest level since April 2022. On top of that, March saw deterioration in supply among 90 percent of major markets. New listings aren’t filling the gap either – 30 percent fewer properties hit the market in March as compared to pre-pandemic norms. That deficit has now increased in each of the last six months and is up from -27 percent in February and -25 percent the month before. Given the modest rise in sales volumes, current available inventory represents just 2.6 months of supply on a seasonally adjusted basis, tipping the scale back toward sellers in a tightly constricted market.”