Affordable homeownership opportunities continue to be an elusive concept, with new data from Black Knight Inc. (NYSE:BKI) that found all of the nation’s 100 largest markets remain less affordable than their respective long-term averages.
The new data study determined that it requires 34.2% of the median household income for homebuyers to make principal and interest payments on the median-priced home purchased with 20% down using a 30-year fixed-rate mortgage. Markets where inventory remains too-tight continue to see price increases – most notably Connecticut’s capital city Hartford, where prices were up by 1.3% from March to April while there are 81% fewer active listings compared to the pre-pandemic era. Black Knight predicted Hartford’s monthly gains would equate to an annual home price growth rate of 15.3% if the current inventory shortage persists.
“In a sense, the gridlocked housing market has been feeding on itself,” said Black Knight Vice President of Enterprise Research Andy 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 and 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.”
Walden added that the Texas capital of Austin was the sole housing market where inventory is back above pre-pandemic levels. However, he also noted 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 Black Knight 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.”
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