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June 2022 Mortgage Monitor

June Sees Record-Setting Slowdown in Home Price Growth, Largest Monthly Inventory Gain in 12 Years; Prices Back Off Highs in Some Major Markets

  • Annual home price growth dropped by nearly two percentage points in June – the greatest single-month slowdown on record since at least the early 1970s – with the rate of slowing this month jumping 66% from May
  • While June’s slowdown was record-breaking, home price growth would need to decelerate at this pace for six more months to drive annual appreciation back to 5%, a rate more in line with long-run averages
  • It could take five months or more for the full impact of recent interest rate spikes to be reflected in traditional home price indexes, which suggests the potential for even stronger slowing to come
  • Localized slowdowns were even more pronounced; 25% of major markets saw home price growth rates slow by three percentage points, with four of those decelerating by four or more points in June alone
  • Though ICE’s Collateral Analytics data shows a seasonally adjusted 22% (114K) increase in the number of homes listed for sale over the past two months, inventory is still 54% below 2017-2019 levels
  • Facing a national shortage of 716K listings, it would take more than a year of such record increases for inventory levels to fully normalize
  • Some metro area markets are returning to pre-pandemic inventory levels more quickly than the national rate, with price gains softening or even showing early signs of reversing course in response
  • With the supply/demand equation shifting quickly, some of these markets – including San Jose, Calif.  (-5.1%), Seattle (-3.8%) and San Francisco (-2.8%) – are now seeing home prices pull back from recent peaks

JACKSONVILLE, Fla. – Aug. 1, 2022 – Today, the Data & Analytics division of ICE released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage, real estate and public records data sets. With June marking the greatest deceleration in home price growth on record, this month’s report dives deep into the latest housing market trends, looking specifically into home price appreciation and for-sale inventory trends at both the national and metro levels. According to Data & Analytics President Ben Graboske, June’s slowdown from 19.3% to 17.3% annual home price growth coincided with the largest single-month gain in homes listed for sale in 12 years.

“The pullback in home price growth in June marked the strongest single month of slowing on record dating back to at least the early 1970s – and it wasn’t even close,” said Graboske. “According to the ICE HPI, the annual rate of appreciation dropped nearly two full points in June. For context, during the 2006 downturn the strongest single-month slowing was 1.19 percentage points – about what we saw last month – and June topped that by 66%. The slowdown was broad-based among the top 50 markets at the metro level, with some areas experiencing even more pronounced cooling. In fact, 25% of major U.S. markets saw growth slow by three percentage points in June, with four decelerating by four or more points in that month alone. Still, while this was the sharpest cooling on record nationally, we’d need six more months of this kind of deceleration for price growth to return to long-run averages. Given it takes about five months for interest rate impacts to be fully reflected in traditional home price indexes we’re likely not yet seeing the full effect of recent rate spikes, with the potential for even stronger slowing in coming months.

“We’re also seeing significant shifts in the demand-supply equation, though that too has quite a way to go before normalization. Even with our Collateral Analytics data showing a seasonally adjusted 22% increase in the number of homes listed for sale over the past two months, the market is still at a 54% listing deficit when compared to 2017-2019 levels. With a national shortage of more than 700,000 listings, it would take more than a year of such record increases for inventory levels to fully normalize. Of course, some metro areas are seeing inventory return to the market more quickly than others. San Francisco officially returned to pre-pandemic levels in June, becoming the first major market to do so, with San Jose close behind, where the number of homes listed for sale is just 1% off the June 2017-2019 average. It’s therefore of little surprise to find both metros among the markets where prices are pulling back from recent highs, along with Seattle, San Diego, Denver and others.”

Drilling further into June home price data, the report finds the average San Jose home value has fallen 5.1% (-$75K) in the last two months alone, marking the sharpest pullback from recent highs among the top 50 U.S. markets. Seattle follows with a 3.8% decline in home prices over the same period, a reduction of more than $30K. San Francisco (-2.8%, -$35K), San Diego (-2%, -$19.5K) and Denver (-1.4%, -$8.7K) round out the top five. In total, prices have pulled back from recent peaks in 12 of the 50 largest markets, with seven pulling back by 1% or more. As nearly 10% of mortgaged properties were purchased over the past year, this could affect a meaningful number of borrowers who bought into the market at or near recent highs.

The Mortgage Monitor also found that the clear driver behind recent inventory increases is a decline in sales activity due to rising rates and the lowest levels of home affordability in nearly 40 years. Seasonally adjusted home sales are down by more than 21% since the start of the year, with Optimal Blue rate lock data suggesting further slowing in the coming months. Factoring in both active listings and sales volumes, the market has ticked up from a low of 1.7 months of inventory at the start of the year to 2.6 months as of June. If current trends continue to hold, months of inventory could continue to trend sharply upward in coming months. ICE will continue to monitor the situation and report its findings moving forward.

Much more information on these and other topics can be found in this month’s Mortgage Monitor.

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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