- Black Knight's HPI showed that while home prices continued to
pull back in October, the month's 0.43% decline (a seasonally
adjusted 0.13% decrease) was the smallest seen since prices peaked
in June
- Annualized appreciation slowed to 9.3% from September's 10.7%,
marking the seventh consecutive month of cooling, but the smallest
such decline since May
- New for-sale listings in October were 19% (-94K) below 2017-2019 levels, marking the largest
deficit in six years – outside of March and April 2020 when much of the country was in
lockdown
- Three months of stalled inventory growth is softening downward
pressure on home prices from home affordability that still remains
near 35-year lows
- Despite the slowdown in price corrections, equity risk among
2022 purchase mortgages persists, while risk remains minimal among
those who bought 12 or more months ago
- Of all homes purchased with a mortgage in 2022, 8% are now at
least marginally underwater and nearly 40% have less than 10%
equity stakes in their home, a situation most concentrated among
FHA/VA loans
- Overall, at just 0.84%, negative equity rates among all
mortgaged properties remain extremely low by historical
standards
- More than 20% of 2022 FHA/VA purchase mortgage holders have now
dipped into negative equity, with nearly two-thirds having less
than 10% equity
- Early-payment defaults – loans delinquent within six months of
origination – have been rising among FHA borrowers over the past
year and now sit above pre-pandemic levels
JACKSONVILLE, Fla., Dec. 5, 2022
/PRNewswire/ -- Today, the Data & Analytics division of Black
Knight, Inc. (NYSE: BKI) released its latest Mortgage Monitor
Report, based on the company's industry-leading mortgage, real
estate and public records datasets. Despite home price corrections
continuing in many markets nationwide driven by tight affordability
and higher rates, the pace of price declines has slowed measurably
over the past two months. As Black Knight Data & Analytics
President Ben Graboske explains,
what would ordinarily be an environment ripe for steep declines in
home prices has been offset somewhat by stagnant levels of for-sale
inventory.
"We've now seen four consecutive months of home price pullbacks
at the national level," said Graboske. "But after a couple of
significant drops earlier in the summer, the pace of cooling has
slowed considerably, with October's non-seasonally adjusted drop of
just 0.43% the smallest decline yet. Though seemingly
counterintuitive, the much higher rate environment may be limiting
the pace of price corrections due to its dampening effect on
inventory inflow and subsequent gridlock in home sale activity.
While the median home price is now 3.2% off its June peak – down
1.5% on a seasonally adjusted basis – in a world of interest rates
6.5% and higher, affordability remains perilously close to a
35-year low. Add in the effects of typical seasonality and one
might expect a far steeper correction in prices than we have
endured so far, but the never-ending inventory shortage has served
to counterbalance these other factors. Indeed, the volume of new
for-sale listings in October was 19% below the 2017-2019
pre-pandemic average. This marks the largest deficit in six years
outside of March and April 2020 when
much of the country was in lockdown – with the overall market still
more than half a million listings short of what we'd consider
'normal' by historical measures.
"Though the home price correction has slowed, it has still
exposed a meaningful pocket of equity risk. Make no mistake:
negative equity rates continue to run far below historical
averages, but a clear bifurcation of risk has emerged between
mortgaged homes purchased relatively recently versus those bought
early in or before the pandemic. Risk among earlier purchases is
essentially nonexistent given the large equity cushions these
mortgage holders are sitting on. More recent homebuyers don't fare
as well. Of the 450K underwater
borrowers at the end of Q3, the mortgages of nearly 60% had been
originated in the first nine months of 2022 – and these were
overwhelmingly purchase loans. All in, 5% of purchase mortgages
originated thus far in 2022 are now marginally underwater, with
another 20% in low equity positions. Among FHA purchase mortgage
holders specifically, more than 20% have slipped underwater and a
full two-thirds have less than 10% equity. This is an illustrative
and, unfortunately, potentially vulnerable cohort that we will
continue to keep a close eye on in the months ahead."
Digging deeper into the month's data, Black Knight found that,
while still relatively low among conforming loans, the
early-payment default (EPD) rate – which captures mortgages that
have become delinquent within six months of origination –– has
risen among FHA loans for much of the past year to reach its
highest level since 2009, excluding the months in the immediate
wake of the pandemic. This ties into the equity risk discussed
above as well. Such loans rely on rising home values and principal
pay-downs over time to gradually improve their equity positions.
Given the questions surrounding slowing price gains and corrections
around the country, along with rising EPDs among FHA loans, Black
Knight will continue to monitor such equity positions closely.
Much more information on these and other topics can be found in
this month's Mortgage Monitor.
About the Mortgage
Monitor
The Data & Analytics division of Black Knight manages the
nation's leading repository of loan-level residential mortgage data
and performance information covering the majority of the overall
market, including tens of millions of loans across the spectrum of
credit products and more than 160 million historical records. The
combined insight of the Black Knight HPI and Collateral Analytics'
home price and real estate data provides one of the most complete,
accurate and timely measures of home prices available, covering 95%
of U.S. residential properties down to the ZIP-code level. In
addition, the company maintains one of the most robust public
property records databases available, covering 99.9% of the U.S.
population and households from more than 3,100 counties.
Black Knight's research experts carefully analyze this data to
produce a summary supplemented by dozens of charts and graphs that
reflect trend and point-in-time observations for the monthly
Mortgage Monitor Report. To review the full report, visit:
https://www.blackknightinc.com/data-reports/
About Black Knight
Black Knight, Inc. (NYSE: BKI) is an award-winning software,
data and analytics company that drives innovation in the mortgage
lending and servicing and real estate industries, as well as the
capital and secondary markets. Businesses leverage our robust,
integrated solutions across the entire homeownership life cycle to
help retain existing customers, gain new customers, mitigate risk
and operate more effectively.
Our clients rely on our proven, comprehensive, scalable products
and our unwavering commitment to delivering superior client support
to achieve their strategic goals and better serving their
customers. For more information on Black Knight, please visit
www.blackknightinc.com/.
For more
information:
|
|
Michelle Kersch
|
Mitch Cohen
|
904.854.5043
|
704.890.8158
|
michelle.kersch@bkfs.com
|
mitch.cohen@bkfs.com
|
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SOURCE Black Knight, Inc.