US home prices fall at their most significant clip since housing market crater during the great recessionMortgage analytics firm Black Knight said in a report released on Monday.
Median home prices fell by 0.98% between July and August, according to Black Knight’s August Mortgage Monitor report. The revised figures showed an even sharper decline of 1.05% from June to July.
“Together they represent significant reductions in two straight months after more than two years of record-breaking growth,” said Ben Graboschke, president of Black Knight Data & Analytics.
Graboske said, “With materially higher single-month price declines compared to July and August only the winter of 2008 was followed by the Lehman Brothers bankruptcy and subsequent financial crisis.”
price drop Black Knight cited mortgage, real estate and public records datasets as the fastest since January 2009. Median home prices are down 2% compared to their peak in June.
The US housing market was red-hot during the COVID-19 pandemic as low inventory and cheap interest rates drove record buying activity. But when the Federal Reserve raised interest rates in an effort to tame inflation, skyrocketing mortgage rates slackened demand.
The average 30-year fixed-rate mortgage was up 6.7% from the previous week, more than doubling in January.
Despite the recent drop, prices in August were still up 12.1% from a year ago, according to the report.
The sharp rise in mortgage rates, as well as home prices that are still much higher than normal, have resulted in an affordability crisis for potential buyers.
Based on median household income, buyers are putting 38.2% of their monthly intake toward mortgage payments, assuming an average-priced home with a 30-year mortgage and a 20% down payment.
According to Black Knight, this costly figure establishes the current US housing market as the least affordable since 1984. As a result, many potential buyers have been pushed to the side.
In many cases, sellers are responding to a decrease in demand. by cutting listing prices,
“Right now, potential sellers are not only coming to grips with falling prices due to falling demand and increasingly high interest rates, but they also have a growing urge to give up their own historically low-rate mortgages in this environment. There’s also discontent,” Graboschke said.
Graboschke noted that many sellers are taking a wait-and-see approach to the market and expect the situation to improve by spring.