In multiple markets throughout the U.S., home prices are on the rise again, reaching all the way to heights not seen before.
A recent report issued by Black Knight revealed that, during June, home prices grew at a rate of 0.8% overall. That resulted in prices of homes reaching record levels in about 60% of markets throughout the country.
The strongest growth in price was seen in Seattle, San Jose and Hartford, Connecticut, according to the report. The northeast and Midwest regions saw the biggest spikes in prices.
The region with the biggest drop in prices was Austin, which experienced quite the boom during the pandemic, reaching its peak in prices last year.
In a statement, Andy Walden, the vice president of enterprise research for Black Knight, said:
“We’ve been noting for some months that the recent rate of home price gains would have a lagging, but significant, impact on the annual rate of appreciation. Well, June marked that inflection point.
“Not only has Black Knight HPI reached a new record high – on both seasonally adjusted and non-adjusted bases – but 60% of major markets have done so as well.”
Home prices are on the rise as mortgage rates continue to increase. This has led more homeowners to decide to stay in their homes rather than seek new ones, since they are likely enjoying locked-in mortgage rates that are significantly lower than they would find if they tried to get a new mortgage today.
That has resulted in a shortage of housing inventory, which has subsequently increased the price of homes. As a result, many homeowners who lost equity last year when the housing market cooled off have now regained a big portion of it.
In June, according to the report, total equity was more than $16 trillion. The average homeowner who has a mortgage had $199,000 in equity. While that’s an increase from the first quarter of 2023, it’s down slightly from the $207,000 in average equity that mortgage holders had at this time in 2022.
“Rising home prices have boosted homeowner equity levels as well, which had been retreating from their 2022 highs not very long ago. In fact, despite total outstanding mortgage debt topping $13 trillion for the first time in history, much of the decline in equity we’d tracked since last year’s peak has since been recovered.”
This has all resulted in a housing market that is downright unaffordable for a lot of would-be homebuyers. In addition to mortgage rates being above 7% for many 30-year fixed-rate loans, housing prices are significantly higher now than they were not too long ago.
All of this has kept many prospective homebuyers on the sidelines, opting to rent instead.
And those homeowners who might have considered moving – either for an upgrade, downgrade or change in location – are deciding to remain in their homes as well.
In fact, many people are deciding to tap into their equity to use on home improvement projects rather than selling their current home and seeking upgrades elsewhere.