Black Knight: Tightening Credit Availability Adds to Affordability Struggles as Rates Remain Elevated, Inventory Shortages Worsen and Home Prices Strengthen
- With 30-year rates rising again in May, each of the 100 largest
U.S. markets is once again less affordable than its own long-term average - Nationally, it now takes
34.2% of the median household income to make principal and interest (P&I) payments on the median-priced home purchased with20% down using a 30-year fixed-rate mortgage - According to Optimal Blue rate lock data from Black Knight, after pulling within
15% of pre-pandemic levels on rate dips earlier this year, in recent weeks purchase activity fell back to a34% deficit on shrinking demand - Likewise, rising borrower credit scores and down payments among recent rate locks point to the tightening of credit availability compounding the challenges facing potential homebuyers
- Black Knight Collateral Analytics data showed home sales volumes fell in April, as a lack of both affordability and inventory continue to create major market headwinds
- Having worsened in eight of the past nine months on a seasonally adjusted basis, for-sale inventory is now at its lowest level since April 2022, with inventory deteriorating in
95% of major markets since the start of 2023 - This continues to put upward pressure on home prices this spring, with April marking the fourth consecutive monthly increase on a seasonally adjusted basis
- April's seasonally adjusted +
0.46% increase was roughly on par with the 30-year average of +0.48% for the month, and would equate to a5.5% annualized growth rate if sustained for a 12-month period - Despite prices firming, annual growth slipped to
0.0% in April – marking the first time home prices have been flat year over year since the market began to recover in the wake of the Great Financial Crisis - Price strengthening this spring has erased more than
60% of the declines seen late last year at the national level, and at the current rate of growth would fully erase those corrections by mid-2023
"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
"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
This month's report also dives deeper into housing market trends at the geographical level. Along the West Coast, where inventory levels have pulled back again this spring, prices have begun to rise again, reversing some of the correction in prices from late last year.
Much more information on these and other topics can be found in this month's Mortgage Monitor.
About the Mortgage Monitor
The Data & Analytics division of Black Knight manages the nation's leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the Black Knight HPI and Collateral Analytics' home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering
Black Knight's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: https://www.blackknightinc.com/data-reports/
About Black Knight
Black Knight, Inc. (NYSE:BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage lending and servicing and real estate industries, as well as the capital and secondary markets. Businesses leverage our robust, integrated solutions across the entire homeownership life cycle to help retain existing customers, gain new customers, mitigate risk and operate more effectively.
Our clients rely on our proven, comprehensive, scalable products and our unwavering commitment to delivering superior client support to achieve their strategic goals and better serving their customers. For more information on Black Knight, please visit www.blackknightinc.com/.
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