Home price growth is still very high, but a new Black Knight report has captured a record dip in June.
May data showed a 19.3% year-over-year appreciation, but June’s fell to 17.3%.
According to the report, this is the largest decline since record-keeping began in the 1970s — but there are many considerations.
First, the price growth that led up to these declines were already at record paces. As a result, any move toward normal figures will appear as a large decline.
Second, 17.3% is still a high appreciation rate — “staggeringly high,” as Matthew Graham wrote for Mortgage News Daily.
To compare, the housing boom in the mid-2000s that ended up contributing to the financial crisis didn’t get above 15%.
According to Black Knight, the June deceleration is 66% stronger than the prior month’s, and is the most significant drop since at least the early 1970s.
During the 2006 housing downturn, the strongest monthly slowing was 1.19%, which is similar to May’s percentage. June’s slowing was at nearly two full percentage points.
According to the report, it would take six more months of equivalent slowing for the annual growth rate to come down to 5%, which is more in line with the long-term average.
High home prices and mortgage rates in 2022 have slowed sales enough in some areas to help boost inventory levels. Certain metro areas are now back up to 2017-2019 levels.
However, the national average is still down more than 50%.
According to Realtor.com’s July housing data, the national inventory of active listings increased by 30.7% over last year, which is a record growth rate.
The total inventory of unsold homes, which includes pending listings, increased by 3.5% year-over-year, but this is the first time since September 2019.
Overall, experts say the data reveals that the housing market is becoming more balanced. This means inventory is slowly rising as price reductions are slowly increasing.
Time on the market, however, is still much lower than pre-pandemic levels, according to the report. It is now at 35 days, which is 26 days less than pre-pandemic.
At the beginning of the year, some housing experts believed the nation would be finding more balance by the end of the year, while others believed it could take until 2024.
The data is showing that the numbers are heading in the right direction, which is good news for those who are still hoping to purchase a home this year or refinance.
While home prices remain high and mortgage rates are hovering below historical averages, experts also are encouraging homeowners to take the opportunity to cash-out on the equity they have gained.
A cash-out refinance can help homeowners make the types of home improvements that can further increase their home’s value.
Image by Nattanan Kanchanaprat.