An aerial view from a drone taken on January 26, 2021 in Miramar, Florida, shows neighborhood homes. Existing home prices rose to their highest level in six years, according to two separate indicators.
Joe Ladle | Getty Images
Home prices fell 0.77% from June to July, the first monthly decline in nearly three years, according to Black Knight, a mortgage software, data and analytics company.
The drop may seem small, but it’s the biggest one-month price drop since January 2011. Also, in his July performance dating back to 1991, he is his second worst performance during the Great Recession, behind only his 0.9% drop in July 2010.
The sharp and rapid rise in mortgage rates this year has made the already expensive housing market even more affordable.House prices rose sharply in the first few years covid pandemic Demand was incredibly strong, supply was historically weak, and mortgage rates were set at more than a dozen record lows.
Read more about real estate coverage
Housing affordability is now at its lowest level in 30 years. Black Knight says he needs 32.7% of median household income to buy an average home with a 20% down payment on a 30-year mortgage. That’s about 13 percentage points more than when we entered the pandemic, and significantly more than in the years before and after the Great Recession. The 25-year average is 23.5%.
“The dynamics between interest rates, home inventories and home prices are unacceptable from an affordability perspective, and at some point we’re going to have to give something away,” said Andy Walden, vice president of enterprise research. I’ve been advising you for a long time,” he said. Black Knight strategy.
“July data provides clear evidence of an important inflection point in the market, and we are witnessing just that,” he added. “A more neutral seasonal month than usual for the housing market. Further price adjustments are likely on the horizon as we shift to
Prices historically increase by an average of 0.4% from June to July. This is because the market weighs heavily on families buying larger and more expensive homes. Families like to travel during the summer when school is closed.
Even during the Great Recession, home prices typically rose slightly from March to May due to market seasonality. All price drops in that era occurred between July and February.
Some local markets have seen even sharper declines in the past few months. San Jose is the largest, with home prices down 10% in recent months, followed by Seattle (-7.7%), San Francisco (-7.4%), San Diego (-5.6%), Los Angeles (-4.3%) and Denver (-4.3%). -4.2%).
House prices in July were 14.3% higher than in July 2021, more than three times the historical annual price increase, but most of the increase occurred in the first five months of 2022. , occurred before mortgage rates skyrocketed. .
Average interest rates for popular 30-year fixed mortgages have been around 3% this year, according to Mortgage News Daily. It rose slowly month by month, retreating slightly in May, but even more dramatically in June when he topped 6%. It is currently hovering around 5.75%.