Business

Home prices soar suddenly after several months of declines

by Adam Barnes - 04/03/23 2:33 PM ET

Home prices rose nationally for the first time in eight months in February amid continuing inventory challenges and relief in affordability leading to a rise in demand, according to data released Monday.

“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.

Seasonally adjusted prices increased by 0.16 percent last month as the benchmark 30-year mortgage saw declines, data from Black Knight shows. This marks the strongest single-month gain since last May.

Although 78 percent of the nation’s 50 largest markets experienced rising prices last month, prices fell in several previously hot markets, including Austin, Las Vegas, San Francisco and Seattle.

Angela Banks poses in front of the Baltimore house she used to rent on Feb. 15. In 2018, Banks was told by her landlord that Baltimore officials were buying her family’s home of four decades with plans to demolish the three-story brick rowhouse to make room for an urban renewal project aimed at transforming their historically Black neighborhood.

The average 30-year fixed rate mortgage declined again last week to 6.32 percent, according to Freddie Mac. Thirty-year mortgage rates sat at 4.67 percent the same time last year.

“Over the last several weeks, declining rates have brought borrowers back to the market but, as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers,” Freddie Mac chief economist Sam Khater said in a statement at the time.

Black Knight data revealed that inventory fell for the fifth-consecutive month, reaching its lowest point since May 2022. And 90 percent of markets experienced decorating inventory levels.

“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,” Walden said.

“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,” he added.