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April 2023 Mortgage Monitor

Tightening Credit Availability Adds to Affordability Struggles as Rates Remain Elevated, Inventory Shortages Worsen and Home Prices Strengthen

  • With 30-year rates rising again in May, each of the 100 largest U.S. markets is once again less affordable than its own long-term average
  • Nationally, it now takes 34.2% of the median household income to make principal and interest (P&I) payments on the median-priced home purchased with 20% down using a 30-year fixed-rate mortgage
  • According to Optimal Blue rate lock data from ICE, after pulling within 15% of pre-pandemic levels on rate dips earlier this year, in recent weeks purchase activity fell back to a 34% deficit on shrinking demand
  • Likewise, rising borrower credit scores and down payments among recent rate locks point to the tightening of credit availability compounding the challenges facing potential homebuyers
  • ICE Collateral Analytics data showed home sales volumes fell in April, as a lack of both affordability and inventory continue to create major market headwinds
  • Having worsened in eight of the past nine months on a seasonally adjusted basis, for-sale inventory is now at its lowest level since April 2022, with inventory deteriorating in 95% of major markets since the start of 2023
  • This continues to put upward pressure on home prices this spring, with April marking the fourth consecutive monthly increase on a seasonally adjusted basis
  • April’s seasonally adjusted +0.46% increase was roughly on par with the 30-year average of +0.48% for the month, and would equate to a 5.5% annualized growth rate if sustained for a 12-month period
  • Despite prices firming, annual growth slipped to 0.0% in April – marking the first time home prices have been flat year over year since the market began to recover in the wake of the Great Financial Crisis
  • Price strengthening this spring has erased more than 60% of the declines seen late last year at the national level, and at the current rate of growth would fully erase those corrections by mid-2023

JACKSONVILLE, Fla. – June 5, 2022 – Today, the Data & Analytics division of ICE released its latest Mortgage Monitor Report, based on the company’s industry-leading mortgage, real estate and public records data sets. With the spring homebuying season defying historical norms, this month’s report looks at the intersection of affordability, inventory, demand and credit availability. As Vice President of Enterprise Research Andy Walden explains, the challenges facing homebuyers – and the real estate and housing finance industries more widely – are only becoming more deeply entrenched as the months go on.

“In a sense, the gridlocked housing market has been feeding on itself,” said Walden. “While elevated interest rates continue to weigh on both affordability and demand, they’re simultaneously constricting supply as well as would-be sellers who locked in ultra-low rates early in the pandemic continue to sit on the sidelines. The combination of lower supply and demand in April led to both slowing sales and firming prices. In fact, while home sales dipped, April marked the fourth consecutive month of home price gains, which are now almost universally rising across the country again on a seasonally adjusted basis. Only Austin, Texas – the sole market where inventory is back above pre-pandemic levels – is still seeing meaningful price corrections continuing into the spring. In today’s market, interest rates are acting as a double-edged sword, reducing or increasing both demand and supply as they rise and fall, making it challenging to find a rate-driven path to easing affordability and home prices.

“Amidst all of this, we’re also beginning to see clear signs of tightening credit availability. Our Optimal Blue rate lock data shows that average credit scores and down payments are on the rise, with tightening credit compounding the significant challenges already facing potential home buyers and the origination market alike. According to our McDash loan-level mortgage performance dataset, April purchase credit scores were the highest on record, dating back to 2000, when ICE first started tracking the metric. Pullbacks in purchase rate lock volumes have continued, dropping 11% from the week ending March 25 to the week ending May 20, in what would typically be the heart of the homebuying season. Indeed, purchase locks have fallen back down to more than 30% below pre-pandemic levels, after pulling to within 15% on rate dips in mid-January and mid-March. Demand is obviously suffering, and the fact that this spring’s strengthening home prices have erased more than 60% of the ‘correction’ seen late last year isn’t likely to help much on that front.”

This month’s report also dives deeper into housing market trends at the geographical level. Along the West Coast, where inventory levels have pulled back again this spring, prices have begun to rise again, reversing some of the correction in prices from late last year. San Jose, Calif. – among the metros that saw the largest price corrections in 2022 – ranked in the top 20% of markets in terms of single-month seasonally adjusted price gains in April (+0.8%), while San Diego prices were up by 0.9% and Seattle by +0.7% in the month. Hartford, Conn. (+1.3%) – the market with the largest inventory deficit nationwide, with 81% fewer active listings compared to pre-pandemic levels – experienced the largest single-month price gains, followed by Milwaukee (+1.2%), Detroit (+1.1%), Cleveland (+0.9%) – the most affordable market compared to its long-run average – Columbus, Ohio (+.9%), and Boston (+.9%). If sustained, Hartford’s monthly gains would equate to an annual home price growth rate of 15.3%, again sparking the risk of a reheating housing market should inventory shortages persist.

About Mortgage Monitor

The Data & Analytics division of Black Knight manages the nation’s leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the Black Knight HPI and Collateral Analytics’ home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of U.S. residential properties down to the ZIP-code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.

Black Knight’s research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: https://www.blackknightinc.com/data-reports/

About Black Knight

Black Knight, Inc. (NYSE:BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage lending and servicing and real estate industries, as well as the capital and secondary markets. Businesses leverage our robust, integrated solutions across the entire homeownership life cycle to help retain existing customers, gain new customers, mitigate risk and operate more effectively.

Our clients rely on our proven, comprehensive, scalable products and our unwavering commitment to delivering superior client support to achieve their strategic goals and better serving their customers. For more information on Black Knight, please visit www.blackknightinc.com.

About Mortgage Monitor

ICE manages the nation’s leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the ICE Home Price Index and ICE Valuation Analytics’ home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of U.S. residential properties down to the ZIP-code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.

ICE’s research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: https://www.icemortgagetechnology.com/resources/data-reports

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges – including the New York Stock Exchange – and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines and automates industries to connect our customers to opportunity.

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Media Contacts

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Katia Gonzalez
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