Black Knight: Home Prices Up, but Slowing; Fitch Says Prices ‘Sustainable’
Black Knight, Jacksonville, Fla., said home prices rose by 0.5 percent in July and by nearly 6 percent year over year–the 63rd consecutive month of annual home price appreciation–but showed signs of continued slowing.
The company’s Home Price Index report said the rate of growth in home prices continues to slow, with month over month appreciation falling each month since hitting a high back in March (1.3 percent). Year over year appreciation, after increasing every month this year, leveled off in July.
Home prices rose to $281,000, another record.
The report said New York home prices showed continued strength, leading all states in monthly appreciation at 1.8 percent and accounting for nine of the 10 best-performing metropolitan areas. Of the 20 largest states, only Virginia saw home prices pull back, with a 0.2 percent month-over-month decline from June.
Among the nation’s 40 largest metros, home prices in Virginia Beach, Va., Los Angeles and Washington, D.C, saw slight declines as well. Up 11.1 percent since the start of 2017, home prices for the San Jose, Calif., metro area topped $1 million.
The report said 11 of the 20 largest states and 20 of the 40 largest metros hit new home price peaks in July.
In a separate report, Fitch Ratings, New York, said home prices in the United States have now climbed to levels last seen a decade ago, though unlike 10 years prior, much of the country’s growth is now sustainable
Fitch reported home prices grew at nearly a 5 percent annualized rate last quarter and are 36 percent higher nationally since reaching their low in 2012. As a result, they are now slightly above peak levels reached in 2006-2007.
“The difference this time around compared to a decade ago rests with several other notable factors aside from the much talked about low mortgage rates and falling unemployment,” said Fitch Managing Director Grant Bailey. “The U.S. population has increased by more than 30 million people and the median household income has increased by more than $12,000 a year–an increase of more than 30 percent since 2006. Both the significantly higher population and income levels provide much greater support for the price levels today.”
That said, Bailey noted, growth remains somewhat disjointed in some regions of the U.S. He said prices in major metro areas of Texas are now more than 50 percent higher than they were in 2006, while prices in New York, Philadelphia and Washington D.C. are still 4-10 percent below 2006 levels. Elsewhere, home prices in major cities throughout Florida remain more than 15 percent below 2006 levels. Overheated home price pockets remain largely in the Western United States (Texas, Portland, Phoenix and Las Vegas), which Fitch lists at more than 10 percent overvalued.
