Home Price Growth Cooling YOY

Home price growth cooled in March, a good sign for buyers moving into spring and summer.

ICE’s Mortgage Monitor Report showed the company’s Home Price Index clocking deceleration to 2.7% annually in February, with early data for March nudging down even further to 2.2%.

“Analysis of ICE HPI data shows a broad-based cooling of home prices, with 90% of U.S. markets experiencing slower home price growth compared to three months ago,” said Andy Walden, Head of Mortgage and Housing Market Research for ICE. 

“This trend is being driven by improved inventory levels, which are up 27% over last year, and stabilized mortgage rates, which dipped below 6.6% in early March and have been holding in the 6.6%-6.7% range.”

ICE recently updated its HPI and now provides an early look at same-month home price trends and a mid-month update, plus new datasets and enhanced index models to include MLS closing data and daily loan-level servicer-contributed information. This enables it to provide more accurate pricing with data from nondisclosure states.

The report made special note of condo prices, which declined for the first time in more than ten years.

The Sunbelt, especially Florida, saw the most condo price hits.

Condo demand has slowed due to sky-high insurance costs and HOA fees, which have priced many buyers out.

Florida in particular has dealt with hurricanes, insurability challenges, and slowing migration.

On top of that, intense building in the state has led to a surge in new inventory, which puts downward pressure on prices.

Other Southern cities are seeing similar price declines, including Little Rock, Arkansas (-6%), Austin, Texas (-5.6%), and Denver (-3.9%).

“While falling condo prices can erode equity levels among existing condo owners, they also afford modest relief to those looking to prospective home buyers. In fact, 95% of U.S. markets have experienced at least slight improvements in affordability compared to a year ago,” Walden commented.