Fewer Homes For Sale, Rising Home Prices, and Interest Rates Prompt Some Buyers to End Home Searches

Black Knight Inc. — a provider of innovative, high performance software, data and analytics for the mortgage and home equity lending services — is reporting in their latest Home Price Index (HPI) that home prices in February 2021 were up 11.6%, the highest annual rate in more than 15-years. Year-over-year median single-family sales rose 15.9% in February. The resulting rise in home prices, along with rising mortgage rates has driven, according to Black Knight, home affordability to its lowest point since mid-2019. According to the HPI, it now takes 20% of the median household income to make monthly payments on an average-priced home–back to the five-year average, but still stronger than the 20-year average of 23.4%. In January and February, it was found that there were 125,000 fewer listings compared to 2020, pushing home for-sale inventory 40% below last year’s level. In a statement prepared for the release of the HPI, Black Knight Data & Analytics President Ben Graboske said, “Of course, upward pressure on home prices has also served to tighten affordability, and with rates on the rise, affordability concerns are coming into sharper focus. Any hopes of 2021 bringing an influx of homes to the market and lessening pressure on prices appear to be dashed for now, as new for-sale listings were down -16% and -21% year-over-year in January and February, respectively. Rather than an influx of homes on the market, we’re now 125,000 fewer new listings in the hole compared to the first two months of 2020 and trending in the wrong direction. With higher interest rates and a continuing shortage of inventory, it will be important to keep a careful eye on both home prices and affordability metrics in the coming months.”

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Depleted Home Inventory Locking Many Out