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Home Prices Continue into Uncharted Territory

Home Prices Continue into Uncharted Territory

As is plain to most reading this blog, the U.S. housing market is in unprecedented territory. Home sales data through May of this year shows that prices on existing U.S. single-family residences (SFR) have been increasing at their highest annual rates since the data was first collected in the 1960s.

As was reported this week in our monthly Mortgage Monitor, the repeat sales based Black Knight HPI concurs. Not only did May mark the fastest rate of appreciation on record for the Black Knight HPI, but it also saw the greatest single-month acceleration of home price growth in history.

Given the historical nature of today’s market – and the impact inventory constraints continue to have on appreciation nationwide – we thought it would be interesting to start by charting existing SFR prices over an extended historical timeline alongside those of new home prices.

Figure 1 shows annual median prices of the two and – as would be expected – they closely track one another, with new home prices consistently being above existing prices.

Figure 1

Figure 2 shows the monthly values of the year-over-year percent change in existing single-family prices over this same period. Much of the recent and unprecedented price increases can be attributed to the pandemic and confluence of associated factors, including very low mortgage rates and a significant number of homeowners working from home. The latter will likely prove be a new and longerterm trend, further reducing the available inventory of homes for sale.  

Figure 2

As we have noted in the past, the U.S. residential real estate market is very diverse, being composed on hundreds of metros and hundreds of thousands of individual neighborhoods. Here at Black Knight, we track each of those, every month.   

Figure 3 shows median existing SFR and condominium sold prices for May 2021 in a number of major CBSAs. Of note here is the wide range of prices, by both geography and property type.

Figure 3

The broad strength of the U.S. residential market can be seen in Figure 4, which shows the annual percentage change in median single-family and condominium prices for the same major CBSAs in May.  

In this group of markets, single-family prices are up approximately 25% year-over-year. Condominium prices – which had been lagging through much of last year – are up approximately 18% on average in these markets. In a few areas, Dallas and Houston most particularly, May condominium appreciation has even outpaced that of SFRs.  

Figure 4 

Within these CBSAs, we’ve observed a shift in activity from urban to more suburban areas.  We can see this when analyzing the most recent median existing SFR price data by living area on a ZIP code level. In the thematic maps below, the year-over-year median price change by square foot, colored for different percentage ranges. Higher percentage change ZIPs are shaded in orange and red; those with lower percentage changes are shown in green and blue.   

Figure 5 shows several Bay Area CBSAs, with a clear pattern emerging as we move away from urban San Francisco.  Similar patterns can be seen with the Dallas and Atlanta CBSAs. 

Figure 5 

Figure 6

Figure 7

 

There is perhaps no better example of the value daily home sales data brings than today’s market. Home price growth continues aggressive, to the point of consistently breaking new records on a monthly basis. Longstanding housing patterns have shifted significantly over the past year, and inventory shortages – of both new and, more importantly, existing homes – continue to put upward pressure on prices.  

Rest assured that Black Knight will continue to monitor this dynamic and historic housing market and report our insights on this blog.