Home Prices See Largest Monthly Drop Since 2009
Home prices fell for a second consecutive month in August, with prices seeing the sharpest contractions in more than 13 years.
Black Knight’s latest Mortgage Monitor Report showed huge price drops month-over-month and stalling inventory levels. Its Home Price Index saw prices decline 0.98%, with the median home price now 2% off its June peak.
July’s 10.5% dip and August’s 0.98% are the largest one-month price drops since the Great Recession and are in the top eight largest dips ever recorded.
“Either one of them would have been the largest single-month price decline since January 2009 – together they represent two straight months of significant pullbacks after more than two years of record-breaking growth,” Black Knight Data & Analytics President Ben Graboske said.
“The only months with materially higher single-month price declines than we’ve seen in July and August were in the winter of 2008, following the Lehman Brothers bankruptcy and subsequent financial crisis.”
Affordability still remains a major concern, hitting its worst point in 38 years. August’s payment-to-income ratio beat out June’s historic 34.3% record at 38.2% thanks to rising interest rates and inflated prices.
This is the largest share since December 1984, when rates were over 10%.
The monthly principal and interest payment on the median home is up 73% YOY, more than $900. Monthly mortgage payments are up 15% in the last six weeks alone.
Inventory has stalled after improving somewhat in the last months, suggesting prices are going to remain elevated. The national inventory deficit remained unchanged at -44%, and the market is short 600,000 listings compared to pre-pandemic levels.
“Right now, prospective sellers are not only coming to grips with falling demand and declining prices due to sharply higher interest rates, but they also have a growing disincentive to give up their own historically low-rate mortgages in this environment. Some may be waiting out the market to see if demand – and prices – return in the spring,” Graboske noted.
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