The month of May saw home price appreciation decelerate at rates comparable to 2006.

Home Price Growth Slowed in 97 of 100 Largest US Housing Markets in May

Affordability remained a challenge for many homebuyers despite home price appreciation slowing in most of the largest US housing markets (97%) during May.  According to the Black Knight Home Price Index, home price appreciation dropped -19.3% y/y during May.

Ben Graboske, president of Black Knight Data & Analytics, said, “The annual home price growth rate fell by more than a full percentage point in May, the largest monthly decline at the national level since 2006.  However, even with growth slowing in 97 of the top 100 US markets, overall home prices still rose +1.5% m/m – nearly twice the historical average for the month of May.”


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Price Deceleration Happening in Select Markets

Housing markets such as those in Austin, Boise and Salt Lake City that soared during the pandemic are the first markets already seeing marked price deceleration.

Markets seeing the most glaring home price deceleration in May included:

  • Austin TX – -12.2%
  • Boise – -12.2%
  • Spokane – -7.1%
  • Stockton – -6%
  • Phoenix – -5.1%
  • Seattle – -5%

Graboske added, “…the pace of deceleration could very well increase in the coming months.”  At the current pace of deceleration, Black Knight indicated that it would take more than 12 months for annual home price appreciation to return to the historic norms of 3 – 5%.

Markets with Highest Home Price Appreciation in May

  1. Tampa – +34.6%
  2. Raleigh – +33.0%
  3. Nashville – +31.3%
  4. Miami – +30.8%
  5. Jacksonville – +29.8%
  6. Orlando – +29.7%
  7. Phoenix – +27.9%
  8. Dallas – +27.8%
  9. Atlanta – +27.1%
  10. Las Vegas – +27.1%

Markets with Lowest Home Price Appreciation in May

  1. Washington DC – +9.9%
  2. Minneapolis – +10.5%
  3. Pittsburgh – +10.9%
  4. Baltimore – +11.0%
  5. Detroit – +11.0%
  6. Chicago – +11.3%
  7. New Orleans – +11.9%
  8. Louis – ++12.5%
  9. Milwaukee – +13.0%
  10. Louisville – +13.0%

Home Price Growth Remains Strong…For Now

As you can see in the above two lists, home price growth continued to see upward movement in most markets during May.  Price “…pullbacks at this point have been marginal,” analysts noted in Black Knight’s monthly Mortgage Monitor report.

Notably, according to this monthly mortgage monitor report, “San Jose CA has seen the sharpest pullback (in home prices) and even that has been modest with the average price dropping by -0.5% in recent months.”

Affordability Concerns

Homes are currently less affordable than they’ve been since the mid-1980’s, according to Black Knight.  Home prices have soared +44% since the onslaught of the pandemic and mortgage rates on a 30-year fixed loan float close to 6%.

A buyer purchasing an average-priced home with a 20% down payment can expect their monthly mortgage payment to outstrip $2,100, or two times more than the $1,089 required mortgage payment at the beginning of the pandemic.

Black Knight estimated that the mortgage payment on an average home now requires 36.2% of median household income.  This 36.2% tops the post-1980’s peak of 34.1% seen in July 2006.

Also according to Black Knight, the payment-to-income ratio is even more glaring in some markets.  Take a look:

  • Los Angeles – 73.3%
  • San Jose – 67.8%
  • Las Vegas – 54.7%
  • Seattle – 50.5%

One of the most conspicuous affordability concerns to watch over the coming weeks/months is that housing affordability is worsening even as housing supply jumped+19% in June.

Thanks to Black Knight, Inman and CNBC.

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