After 17 consecutive months of home-price increases, April witnessed the highest annual home-price growth rate since the mid ’90s, according to Black Knight Data & Analytics Home Price Index (HPI). Sparked by continued low inventory, the number of active for-sale listings was down 53% in April, year-over-year, for a deficit of nearly 750,000 available homes for sale.
As constraints in residential for-sale inventory persist, the report looks at how recent and aggressive home price gains are impacting housing affordability. According to Black Knight Data & Analytics President Ben Graboske, a dwindling inventory of homes for sale is pushing home price growth rates to previously unseen levels.
Single-family homes saw the greatest gains, with prices up 15.6% from last April, said Graboske, while condo prices are up 10%. Driving this growth are two key elements: historically low interest rates and—more acutely—the lack of available for-sale inventory.
What it means:
Even with interest rates within roughly a quarter point of historic lows, aggressive home- price growth has had an impact on affordability levels. At the beginning of June, the share of the median income needed to make the monthly payments on the median-priced home had risen to 20.5%. While still more affordable than the 25-year average of 23.6%, housing has surpassed its five-year average of 20.1%. In recent years, 20.5% has roughly been the tipping point at which appreciation begins to decelerate, but given the severity of inventory shortages, home prices have continued to sharply accelerate.