NewsHome Prices Increased in February After Seven Months of Decline

Home Prices Increased in February After Seven Months of Decline

According to new data from Black Knight, home prices increased in February for the first time in seven months. Sales prices grew a modest 0.16% in February and are up 1.94% annually, a low annual growth rate compared to previous years.

Black Knight reported that this is the first time since 2012 that annual home price growth was below 2% and that the national annual growth rate should be below 0% in April. Sales prices are also down 2.6% from peak levels experienced in 2022.

Increasing housing prices still affect prospective buyers. The Cato Institute’s 2022 Housing Affordability National Survey found that 55% of Americans could not buy the home they currently own under today’s market conditions. Additionally, from the second quarter of 2020 to the fourth quarter of 2022, the median home price increased by 45% from $322,600 to $467,700.

The Black Knight data also indicates that home sales increased in February, despite remaining 18% below pre-pandemic levels. Inventory is also low, with the number of homes falling for five months in a row.

Why Home Prices Increased in February

Home prices increased slightly in February due to low inventory and increased demand from lower mortgage rates. The 30-year fixed-rate mortgage ended 2022 at 6.42%, bottomed out at 6.09% at the beginning of February, and sits at 6.32% as of March 30. A small increase in home prices in February indicates that buyers are very sensitive to changes in mortgage rates.

“In many areas of the country, that dynamic — low inventory and a modest rise in demand — led to an uptick in home prices. All in, 39 of the 50 largest U.S. markets saw prices increase in February — in sharp contrast to just three months earlier when 48 of those 50 were experiencing price declines,” Black Knight Vice President of Enterprise Research Andy Walden said in a statement.

The Implications for Buyers

Black Knight’s data reveals demand, sales numbers, and home prices all ticked up when mortgage rates declined. When mortgage rates decline in the future, prospective homebuyers should expect that an increasing number of competing buyers will enter the market to take advantage of lower borrowing costs.

Buyers should also consider that price changes vary greatly depending on their city. CoreLogic recently reported that prices in the western U.S. almost uniformly declined since last summer, while prices in the eastern half of the country almost uniformly increased. San Francisco, Seattle, and Portland experienced the most significant price decreases, while prices rose the most in Miami, Tampa, and Atlanta.

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