BAM Key Details:

  • The latest Mortgage Monitor Report from Black Knight, Inc. shows the first monthly increase in home prices for February after seven straight months of decline. 
  • Home prices are on the rise as lower rates heat up buyer demand and inventory continues to shrink. 

The latest Mortgage Monitor Report from the Data & Analytics division of Black Knight, Inc. shows the first monthly uptick in home prices for February after seven straight months of decline. 

Lower mortgage rates in late January and early February brought buyers off the sidelines and reignited competition for well-priced homes as inventory continued to shrink. 

The Black Knight Home Price Index for February shows the predictable consequence of this shift with a modest rebound in home prices in 78% of the 50 largest U.S. markets. 

The first national increase in home prices in 8 months

In the early part of February, when mortgage rates declined, buyers were quick to take advantage and bidding wars returned as competition over limited inventory heated up. 

Home prices increased In 39 of the 50 largest U.S. metros—a dramatic turnaround from just three months prior when 48 of those 50 were seeing home price declines. 

February registered a 0.16% seasonally-adjusted month-over-month national increase—the first we’ve seen in eight months. 

While some price increases—most notably in Miami, which saw the largest of the month—can be chalked up to people moving to the area, we’re seeing stronger price gains more generally in those areas with better affordability and larger inventory deficits.

Andy Walden

Black Knight Vice President of Enterprise Research

Meanwhile, national annual price growth continues to drop, falling below 2% (to 1.94%) for the first time since 2012. While that number is still on track to slip below 0% this April, if easing mortgage rates and inventory shortages persist, it may climb back into positive territory later in the year. 

The unfortunate reality is that the scarce supply of inventory that’s the source of so much market gridlock isn’t getting any better. In fact, seasonally adjusted inventory levels continued to deteriorate in February, marking not only the fifth straight month of such declines, but also the largest inventory deficit we’ve seen since May of last year, with more than 90% of markets seeing such deficits grow in February.

Andy Walden

Black Knight Vice President of Enterprise Research

Higher mortgage rates have kept many would-be sellers on the sidelines, thanks to the lock-in effect, which is why new listings have been trending well below pre-pandemic levels for months now. In February, they were 27% below those levels. 

Total active for-sale inventory has fallen back to 47% below pre-pandemic levels after temporarily recovering late last year to within 38% of normal levels. 

Without a significant shift in interest rates, home prices or household income, this is a self-fulfilling dynamic that is quite likely to continue for some time.

Andy Walden

Black Knight Vice President of Enterprise Research

Home sales and homeowner equity levels

Black Knight’s February report also provides a review of the homeowner equity landscape, showing the month’s increase in home prices has helped shore up equity levels that had been slipping. 

Overall total equity for mortgage holders in February was $14.6 Trillion—down $2.0% (-12%) from its peak in 2022. 

Tappable equity—the maximum amount that can be withdrawn while maintaining 20% equity—was at $9.3T, down 15% ($1.6T) from its 2022 peak but still up 56% (+3.4T) over the past three years. 

The average mortgage holder in the U.S. has $178,000 in tappable equity, which is less than the $210,000 from early last year but still 54% ($61,000) above the market average from three years ago. 

The total current combined loan-to-value (CLTV) ratio for the mortgage market is now at 46.8%, higher than the record low of just under 43% in early 2022 but historically still very low—and lower than any level before 2021. 

Read the full Mortgage Monitor Report for February to learn more. 

Top takeaways for real estate agents

Rising home prices is good news for sellers who need or want to sell in today’s market, since the higher the sale price for their home, the more they can put toward their next home purchase—or toward other investments. 

As for determined buyers in your market, prepare them for the likelihood of greater competition for available well-priced homes. And if buying a home isn’t a realistic option for them right now, look for ways to help them save money on rent—or direct them to resources that can help them reduce their monthly expenses.