Average Home Prices Are Now Plummeting. Prices Are Posting The Biggest Monthly Declines Since The 2008 Financial Crisis
Black Knight is reporting that home prices are now posting the biggest monthly declines since the 2008 financial crisis.
Median home prices in August fell 0.98%, only slightly better than July’s 1.05% monthly decline. The average home price is down 2% ($8,800) from its June peak nationally. This is not good news as the nation enters a historically slower fall-winter homebuying season.
The housing market has not seen a two-month drop in prices like this since the collapse of Lehman Brothers in winter of 2008.
Skyrocketing mortgage rates of 7% and low inventory have driven mortgage affordability to its lowest levels since the early 1980s. This is a reversal from the frenetic boom in buying during 2020 and 2021.
As of the end of last week, mortgage rates were hovering around 6.7% and 7%. It now takes 38.2% of the median household income to make the monthly mortgage payment on the median-priced home. That is assuming the home is bought with a 30-year mortgage with 20% down. That monthly payment is up $930 from August 2021. This is a 73% increase.
Home prices are beginning to fall. However, they remain up 12.1% from Aug. 2021. However, annual home price growth is poised to continue falling in coming months. Yet, it is unclear where the bottom is.
Much of that depends on how much inventory returns to the market. There was an uptick in listings from May through July. However, inventory levels stalled in August. The market grew from just 1.7 months of for-sale inventory to 3.1 months before dropping down to three months in August.
Black Knight researchers found that 20% of the markets have seen only marginal declines. A third have experienced drops of 3% or more. This includes nine markets where prices have fallen more than 5%.