Black Knight: Home prices up for first time in eight months

Nearly four in five of the nation's largest metros record price growth in February

February’s decrease in 30-year interest rates spurred a rebound in home prices and halted a streak of seven months of negative growth, according to the Black Knight Home Price Index.

A new report from the real estate analytics company revealed a geographically broad shift in home price trends, with a price increase in 39 of the country’s 50 largest markets helping to end the slide on a national level.

“February’s national increase in home prices – up 0.16%, adjusted for seasonality – marked the first positive monthly growth we’ve seen in eight months,” said Andy Walden, Black Knight’s vice president of enterprise research. “Daily transaction info from Black Knight Collateral Analytics and our Optimal Blue rate-lock data show that the purchase market increased when rates declined in the early part of the month and borrowers were quick to take advantage of limited inventory. In many areas of the country, that dynamic – low inventory and a modest rise in demand – led to an uptick in home prices.”

The widespread price recovery marked a stark reversal from only three months earlier, when 48 of the 50 largest metros in the U.S. were seeing price declines.

“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,” Walden noted.

Following Miami’s 0.63% increase to lead all large cities in monthly gains were Cincinnati (0.55%); Columbus, Ohio (0.53%); Hartford, Connecticut (0.52%); Memphis (0.51%); and Cleveland (0.5%).

Prices remain on the wane in cities like Austin (where home prices fell by 0.82% month over month), Las Vegas (-0.53%), San Jose (-0.52%), Salt Lake City (-0.5%) and Sacramento (0.37%).

Walden noted that the U.S. annualized home price growth rate continued to slide, falling to 1.94% in February. The month marked the first time the figure had fallen below 2% since 2012.

“While that national number is still on track to fall below 0% in April, if inventory challenges and easing interest rates persist, they may well push it back into positive territory later this year,” Walden said.

“The unfortunate reality is that the scarce supply of inventory that’s the source of so much market gridlock isn’t getting any better,” he added. “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. New listings – already trending well below pre-pandemic levels for months – ran 27% below those levels in February as potential home sellers continued to shy away from the market.

“All in, total active for-sale inventory is back to 47% below pre-pandemic levels after having recovered to within 38% of normal levels late last year. 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.”


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