Home prices are going up across the country after slowing for more than a year, according to a new report from data and analytics company Black Knight.
The report found that nationally, home prices in June rose by 0.67% month-over-month on a seasonally adjusted basis. Meanwhile, the annual home price increase was 0.8% in June, up from just 0.2% in May.
Calling the June price increase an inflection point, Black Knight Vice President of Enterprise Research Andy Walden said the rate of home price increases would have a “lagging, but significant impact on the annual rate of appreciation.”
Month-over-month, home prices increased in more than 60% of markets, with notable exceptions in Austin and San Antonio, where prices declined month to month in June on a seasonally adjusted basis. The strongest price growth was in Hartford (+1.2%), Seattle (+1.2%) and San Jose (+1.2%).
“At the national level, home prices have now fully erased their 2022 corrections hitting new all-time highs in June on both seasonally adjusted and non-seasonally adjusted bases,” the report said.
Annual growth was strongest in the Midwest and Northeast markets, while West Coast and pandemic boom markets continue to see prices run below last year’s levels. Milwaukee (+6.4%), Cincinnati (+5.7%), and Philadelphia (+5.6%) are more than 5% above last year’s price peaks, with a handful of Midwest and Northeast markets, including Kansas City, Virginia Beach, Richmond, Baltimore, Providence, St. Louis and Chicago up more than 4%.
Rising home prices also boosted homeowner equity levels. The average mortgage holder now has $199,000 in equity, up from $185,000 in the first quarter, but down from $207,000 at the same time last year. Strong equity positions are one element of today’s historically strong mortgage performance, the report said.
The June report also quantifies the savings during the last big wave of refinance activity. Existing homeowners who have benefitted from $42 billion in cumulative savings through refinancing in the past three years are now also benefiting from strong income growth, according to Black Knight. Existing homeowners need 21% of the median household income to make the average monthly principal and interest payment, compared to more than 36% for prospective homebuyers in today’s market.
Low interest rates locked in during the pandemic are keeping payments down for existing homeowners and contributing to low delinquency levels. Meanwhile, owing to high interest rates, affordability for prospective homebuyers is at near 37-year lows.
For existing homeowners, the relatively low share of income required to meet mortgage obligations along with the strong credit quality are contributing to a 16-year low in seriously delinquent mortgages, the report said.
