Home prices fell for the seventh straight month to start 2023, according to the latest Black Knight Mortgage Monitor Report.
- M-O-M: Home prices fell again in January, pulling back 0.13% on a seasonally adjusted basis. This was the smallest price dip since prices began to fall in July. Home prices are now down 5.5% from their June peak.
- Y-O-Y: Home prices are still positive with prices up 3.43% when compared to January 2022, down 5.3% from December and at the lowest level since 2012. Home prices are on pace to fall below 0% by March/April.
Go East, Young Man. The exodus from the West continues to impact home prices as 4 of the top 5 worst markets are in the West. San Francisco took the top spot with seasonally adjusted prices down 13.1% followed by San Jose (-12.9%), Seattle (-11.8%), Austin (-11.5%), and Phoenix (-10.7%).
- Boston is fairing the best of the big cities with home prices only down 3.0% followed by Pittsburg and Tampa both down 3.4%.
Home Affordability. While home affordability worsened in January, it remains below the October peak. It now requires 33.2% of the median household income to make the monthly principal and interest payment on the average home purchase. This is up from January’s average of 32.4% but is below October’s peak of 37%. The 30-year average is around 24%.
Volume Vanishes. There were 1.08M first-lien mortgages originated in Q4 2022, the fewest in a single quarter since Black Knight began reporting the metric in 2000. Despite the collapse of activity at the end of the year, $2.4 trillion in mortgages were originated in 2022, down from $4.3T and $4.4T in 2021 and 2020, respectively.
BOTTOM LINE: Rising rates in February have made homes less affordable than they were in January. Falling prices should help blunt the rise in rates but if inventory levels don’t start rising home prices are only going to fall so far.