US Home Prices Hit Record Highs in 60 Percent of Key Markets

A sign is posted in front of a home 'sale pending' in San Francisco, Calif., on May 11, 2023. (Justin Sullivan/Getty Images)

U.S. home prices jumped again, hitting new highs in key markets across the country, according to a new report.

Housing prices reached new peaks nationwide, as well as at the local levels, due a continued lack of inventory.

The Black Knight Home Price Index (HPI) annually grew by 0.8 percent in June after slowing for more than a year, with almost every major U.S. market experiencing month-over-month growth.

Home prices rose by 0.67 percent month over month in June, after slowing for 14 consecutive months.

Prices have risen to record levels in 30 out of 50 of the nation’s major housing markets, according to the August 2023 Mortgage Monitor Report.

Home Prices Skyrocket in Midwest and Northeast

Total annual price growth was greatest the Midwest and Northeast, with several metropolitan areas in the latter region rising 5–8 percent above 2022 highs, according to the Report.

Meanwhile, West Coast and pandemic-boom town markets continued to see home prices run below 2022 levels.

The strongest price growth was seen in Hartford, Connecticut; Seattle, Washington; and San Jose, California, while median home prices in Austin, Texas, which boomed during the pandemic, fell far below last year’s peak.

“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,” Black Knight vice president of Enterprise Research Andy Walden said in the report.

“Well, June marked that inflection point. Not only has the Black Knight HPI reached a new record high—on both seasonally adjusted and non-adjusted bases—but 60 percent of major markets have done so as well, he added.

Homeowner Equity Levels Rise From 2022 as Inventory Shrinks

Recent price growth was furthered by increasingly tight housing inventory, allowing existing homeowners to recoup a substantial portion of their equity lost last year, as high mortgage rates constricted sales in the market.

Higher mortgage rates, led by Federal Reserve interest-rate hikes, have worsened the housing shortage, as many homeowners have become more reluctant to sell after purchasing their homes at a lower rate.

Total equity exceeded $16 trillion in  June, with the average mortgage holder maintaining some $199,000 in equity, according to the HPI report.

This is an increase from the first quarter of the year, but down from the $207,000 during the same period in 2022.

“Rising home prices have boosted homeowner equity levels as well, which had been retreating from their 2022 highs not very long ago,” said Mr. Walden.

“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.”

Home price growth has also pushed homeowner equity levels back to within 3 percent of 2022 peaks.

Overall mortgage holder equity topped $16 trillion again in June, with tappable equity—that is, the amount that can be accessed while retaining a 20 percent equity stake—rose to $10.5 trillion, within $434 billion, or 4 percent, of 2022 peaks.

The number of underwater homeowners is up nearly 70 percent from last year, but is 52 percent below 2019 levels.

“There are less than half as many underwater homeowners than there were in 2019 before the onset of the pandemic, with only 3.9 percent having less than 10 percent equity, down from 6.6 percent in 2019,” explained Mr. Walden.

Only 344,000 or 0.65 percent of mortgage holders nationwide currently owe more on their homes than their property is worth.