Home price appreciation is back to breaking records after a period of declines, pushing homeownership further out of reach for many Americans.
Black Knight’s Home Price Index hit an all-time high in June for both seasonally adjusted and unadjusted levels, up 0.67% from May and 0.8% YOY. This is a serious comeback after 14 straight months of annual declines.
Basically every major American metro saw month-over-month growth explode as demand continues to outstrip supply. In 30 of the country’s 50 largest markets prices have hit new highs.
“We’ve been noting for some months that the recent rate of home price gains would have a lagging, but significant, impact on the annual rate of appreciation. Well, June marked that inflection point… Not only has the Black Knight HPI reached a new record high – on both seasonally adjusted and non-adjusted bases – but 60% of major markets have done so as well,” said Black Knight Vice President of Enterprise Research Andy Walden.
Several metros in the Northeast are now seeing prices 5-8% above their 2022 peaks.
The Midwest saw strong growth as well, while overblown West Coast and pandemic boomtowns are experiencing declines.
Even where prices are moderating, homeowners are winning.
Appreciation has pushed homeowner equity within 3% of their 2022 highs. So while homeowners may have taken on immense debt (mortgage debt broke $13 trillion for the first time ever), they are coming out on top so long as home prices hold.
Tappable equity now sits at $10.5 trillion, also close to 2022’s high. The average mortgage holder can access $199,000 in equity while maintaining a 20% stake in their home.
For potential buyers, soaring prices are a headache, however. Consumers are overwhelmingly pessimistic about the market, with 82% saying they believe it’s a bad time to buy a home despite optimism about their personal finances.
“While consumers are reporting confidence in the components related to their personal financial situations, it’s unlikely we’ll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability,” Doug Duncan, Fannie Mae Senior Vice President and Chief Economist, noted.
Mortgage applications have slipped in recent weeks as prices, combined with high interest rates, have forced many potential buyers out of the game. Sellers are waiting on the sidelines for rates to decline as well, keeping prices elevated.
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