The housing market is near an inflection point as home prices show signs of trending sharply higher, Black Knight says
Why rents are still setting record highs in some US cities
Jason Ma
Wed, July 12, 2023 at 8:05 AM GMT+8·2 min read
- The housing market is near an inflection point as home prices look set to spike, Black Knight said.
- Five consecutive months of gains have reversed the pullback in home prices that began last July.
- “There is no doubt that the housing market has reignited from a home-price perspective.”
The housing market is near an inflection point as home prices show signs of trending sharply higher soon, according to analytics company Black Knight.
The latest Black Knight Home Price Index rose for at seasonally adjusted monthly rate of 0.7% in May, hitting a new record high. The fifth consecutive monthly gain also completed a full reversal of the retreat that began last July.
“There is no doubt that the housing market has reignited from a home-price perspective,” said Andy Walden, Black Knight’s vice president of enterprise research.
On a year-over-year basis, home prices are down 0.1%, but Black Knight expects that to change soon, based on the strong monthly increase in May.
Walden said in a statement that the annual rate “would remain at or near 0% for only a short time before inflecting and trending sharply higher in coming months.”
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He added that the reheating in the housing market is widespread, with 27 of the 50 largest markets at or above their prior home price peaks.
And even in markets that are still well below their peaks, prices have been firming up recently and closing that gap, Walden said.
The uptrend in prices comes as housing supply remains tight. Active listings have worsened in 95% of major markets this year and are more than 50% below pre-pandemic levels, according to Black Knight.
While growth in new construction is encouraging, most housing starts are for multi-family units instead of single-family homes, it said.
And with mortgage rates still high amid the Federal Reserve’s tightening campaign, housing affordability continues to suffer.
The principal and interest payment needed to buy the median-priced home is up to a record high of $2,258, Black Knight said, adding that it takes 35.7% of median household income to make the average payment.
“As it stands, housing affordability remains dangerously close to the 37-year lows reached late last year, despite the Federal Reserve’s attempts to cool the market,” Walden said. “The challenge for the Fed now is to chart a path forward toward a ‘soft landing’ without reheating the housing market and reigniting inflation.”
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Separate data last month from analytics firm ATTOM showed that housing costs rose above their historical average in 98% of US counties last quarter. The price for a median single-family home climbed 10% from the first quarter to the second quarter to $350,000.
Read the original article on Business Insider
Source: Yahoo Finance
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