90% of U.S. markets see uptick in home value

April home prices recorded the strongest monthly gain in nearly two years, as 90% of markets in the United States saw home value recover compared to the previous month, an industry report found.

Prices rose 0.32% last month on a seasonally-adjusted basis, equal to a 3.9% annualized rate, according to ICE Mortgage Technology's latest Mortgage Monitor Report. Annual home-price growth increased to 0.9% in April as well.

"Home-price growth accelerated in April as softer interest rates raised the ceiling on borrower affordability," said Andy Walden, head of mortgage and housing market research at ICE, in a press release Monday. "While a 0.32% monthly increase may not sound like much, when annualized, it's equivalent to home prices appreciating at nearly 4% if sustained over a 12-month period."

Seventy of the largest 100 markets in the United States posted year-over-year gains. The Northeast led the country in appreciation again, accounting for seven of the eight fastest-growing markets last month. Scranton, Pennsylvania, topped the list with a 6.6% rise, followed by New Haven, Connecticut, at 6.4% and Milwaukee at 6%.

Meanwhile, all 30 markets that posted annual price declines were located in the South and West, with Cape Coral, Florida, Austin, Texas, and Lakeland, Florida, recording the steepest drops at 5%, 4% and 3.5%, respectively, the report showed. 

"The key question now is whether that momentum can withstand the recent upward pressure on interest rates heading into the heart of the spring buying season," Walden said.

Mortgage rates have been up and down this spring. After dipping below 6% in February for the first time since 2022, the 30-year fixed-rate mortgage climbed for five consecutive weeks in part due to the war in Iran. It then decreased for three straight weeks in April, before spiking again the last two weeks to 6.37%.

As a result of the rate drops early in the year, first-lien refinances totaled $242 billion in the first quarter, more than doubling year over year and marking the strongest quarter since early 2022. 

Refinances accounted for about 44% of all originations, the highest share in four years, with rate-and-term refinances making up 60% of all refinance activity, the highest mark in five years. The average rate-and-term refinancer also lowered their monthly payment by $257 through a 97-basis-point-rate reduction, the report said.

First-time homebuyers made up more than half of all purchase loans closed in March, the highest share in nearly six years, which came as a result of improved affordability early in the year and the lock-in effect limiting existing homeowners' participation. Roughly two-thirds of Federal Housing Administration and Department of Veterans Affairs loans went to first-time buyers as well, according to the report.

The average purchase loan closed in 36.8 days in March, the fastest average closing time on records dating back to 2019. It was also down from 37.3 days a year prior. Across all origination types, the average closing time of 38.2 days marked the third-fastest on record, the report found.