Black Knight: White-Hot Housing Market and Rising Rates Push Affordability Back to 5-Year Average; Low New Listing Volumes Further Constraining Inventory

Rhea-AI Summary

On April 5, 2021, Black Knight, Inc. (NYSE:BKI) released its Mortgage Monitor Report, highlighting significant trends in the U.S. housing market. The report indicates an 11.6% annual home price appreciation in February, marking the highest growth rate in over 15 years. The inventory of homes for sale remains low, contributing to ongoing affordability challenges, where 20% of median income is required for the average home payment. New listings have decreased by 16% and 21% year-over-year in January and February, respectively, raising concerns for future market conditions.

Positive

• Home price appreciation reached 11.6% in February, the highest in over 15 years.
• Approximately 75% of the top 100 U.S. markets experienced annual home price growth of 10% or higher.

Negative

• Affordability is at its lowest since mid-2019, requiring 20% of median income for average home payments.
• New for-sale listings declined by 16% and 21% year-over-year in January and February, leading to 125,000 fewer listings compared to 2020.

JACKSONVILLE, Fla., April 5, 2021 /PRNewswire/ -- Today, the Data & Analytics division of Black Knight, Inc. (NYSE:BKI) released its latest Mortgage Monitor Report, based upon the company's industry-leading mortgage, real estate and public records datasets. This month, with the U.S. housing market remaining extremely hot by any historical measure, the report looks at home price appreciation over the past year and how that's impacted affordability. According to Black Knight Data & Analytics President Ben Graboske, incredibly low levels of for-sale inventory, coupled with still historically low interest rates, continue to put upward pressure on home prices and tighten affordability.

"Our repeat sales-based Black Knight Home Price Index shows February's annual price appreciation at 11.6%, the fastest growth rate in more than 15 years," said Graboske. "Likewise, the daily home sales data tracked by our Collateral Analytics group found a nearly 16% year-over-year increase in the median sales price in February. Multiple years of constrained housing inventory and historically low interest rates have helped fuel this fire to the point where nearly 75% of the 100 largest U.S. markets have seen annual home price growth of 10% or higher. What's more, Collateral Analytics' Market Conditions Report shows the housing markets in 75% of ZIP codes rated either 'Strong' or 'Hot' based on underlying market metrics. Only 7% are characterized as 'Normal.'

"Of course, upward pressure on home prices has also served to tighten affordability, and with rates on the rise, affordability concerns are coming into sharper relief. It now takes 20% of the median income to make the monthly payment on the purchase of an average-priced home, back up to the five-year average after several years of low interest rates mitigating the impact of rising prices on affordability. Housing is now the least affordable it's been – factoring in interest rates, home prices and income – since mid-2019. Any hopes of 2021 bringing an influx of homes to the market and lessening pressure on prices appear to be dashed for now, as new for-sale listings were down 16% and 21% year-over-year in January and February, respectively. Rather than an influx of homes on the market, we're now 125,000 fewer new listings in the hole compared to the first two months of 2020 and trending in the wrong direction. With higher interest rates and a continuing shortage of inventory, it will be important to keep a careful eye on both home prices and affordability metrics in the coming months."

At the geographical level, Black Knight's affordability data shows that recent increases in 30-year rates, combined with sharply rising home prices, are starting to put pressure on some higher-priced markets. In Los Angeles for example, even with 30-year rates at 3.17% as they stand in late-March, it requires 43.6% of the median monthly income to make mortgage payments on the median-priced home purchase when putting 20% down – well over twice the national average. In both San Jose (39.6% of median income) and San Francisco (37.2%), home prices were on the verge of falling in late 2018 before interest rates dropped more than two points over the following two years, releasing some of the affordability pressures on those markets. It remains to be seen if they will reach a similar inflection point in the near future. Much more detail can be found in Black Knight's February 2021 Mortgage Monitor Report.

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 95% of U.S. residential properties down to the ZIP-code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.

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/.

For more information:
Michelle Kersch			Mitch Cohen
904.854.5043			704.890.8158
michelle.kersch@bkfs.com			mitch.cohen@bkfs.com

 

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SOURCE Black Knight, Inc.

FAQ

What did Black Knight report on April 5, 2021 regarding home prices?

Black Knight reported an 11.6% annual increase in home prices for February 2021, the highest in over 15 years.

How is inventory affecting the housing market according to Black Knight?

Black Knight noted a significant drop in new listings, down 16% and 21% year-over-year in January and February, contributing to affordability pressures.

What percentage of income is required for average home payments as per Black Knight's findings?

According to Black Knight, it now takes 20% of median income to afford the average-priced home.

What does the Black Knight report suggest about affordability trends?

The report indicates that housing affordability is at its lowest level since mid-2019 due to rising home prices and interest rates.