Home prices rise for first time in seven months: Black Knight

Home prices rose for the first time in seven months during February on lower rates and the continued inventory shortage, according to the latest Black Knight Mortgage Monitor report.

On an annual basis, however, growth was under 2% for the first time since 2012.

"The purchase market increased when rates declined in the early part of the month and borrowers were quick to take advantage of limited inventory," said Andy Walden, vice president of enterprise research, in a press release. "In many areas of the country, that dynamic — low inventory and a modest rise in demand — led to an uptick in home prices."

In a turnaround, 39 of the country's 50 largest metro areas reported prices increased during February. That is compared with a decline in 48 markets just three months earlier.

On a month-to-month basis, prices grew by 0.16% on a seasonally adjusted basis. In January, prices fell 0.13% from December.

But the annual growth rate fell to 1.94%, and Walden said it is still likely to slip into negative territory when April's data is examined. CoreLogic also previously predicted negative annual home price growth by spring of this year.

"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."

Prices are 2.6% below their 2022 peak, a slight improvement from January when it was 2.7% under.

The current amount of homes for sale are now 47% below the pre-pandemic level, the largest deficit since last May; late last year this was 38% under the norm.

This problem is not going away soon. A more recent report from Redfin for the four week period ended March 26 found new listings were down by 22% and just 2.8 months of supply on the market,

Another real estate brokerage, HouseCanary, reported a 33% annual drop in properties being placed for sale combined with a 57% increase in removals in March.

The recent failures of Silicon Valley Bank, Signature Bank and Silvergate Bank are contributing to a further contraction of the housing market, argued Jeremy Sicklick, HouseCanary's CEO. Possible future hikes of short-term rates from the Federal Reserve aren't helping.

"Our latest data indicates that one year of rate hikes has already had significant impacts on housing market activity, with both net new listing volume and contract volume sharply down year-over-year," Sicklick said in a statement. "However, prices appeared to stabilize in March and there was a rise in single-family prices across many markets, which both suggest that the market was beginning to adjust to continuous rate hikes."

Black Knight's Walden, however, declared that housing market gridlock is likely to continue into the future without a significant shift in interest rates, home price or household income.