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Home-price appreciation slows for 13th straight month

Home prices rose by just 1 percent this past March, marking a 13th consecutive month of decelerating prices, according to the latest Mortgage Monitor report from Black Knight.

HouseThe March 2019 figure is down from the 1.25 percent month-over-month price growth in March 2018. It’s a solid signal of the downward trajectory of home-price appreciation, considering that March typically sees the largest home-price gains of the year, according to Black Knight’s Ben Graboske.

“The annual rate of appreciation has now slipped to 3.8%, the first time annual home-price growth has fallen below its 25-year average of 3.9% since 2012,” said Graboske, president of Black Knight’s data and analytics division.

“As we’ve been reporting, home prices began to decelerate in February 2018 as rising interest rates started putting pressure on affordability," Graboske added. "The situation intensified in the last half of the year as 30-year fixed rates peaked near 5% in November, bringing affordability levels close to their long-term averages. ... Of course, rates have since declined, and are now hovering close to 4%. However, they didn’t fall below 4.25% until the last week of March, meaning we likely won’t see the impact — if any — on home prices until May or June housing numbers.”

Still, the low rate environment has already had a positive effect on affordability. The monthly payment needed to buy an average-priced home with a 20% downpayment has fallen 6% in the past six months to $1,173. That’s the lowest average monthly payment in more than a year. The payment-to-income ratio — 22 percent of the median income to buy an average-priced home — is also the lowest in more than a year, and below the long-term average of 25.1%.

“That the market reacted in terms of slowing home-price growth even before we hit that long-term average suggests that a 25% payment-to-income ratio may not be sustainable in today’s market, whether due to excess non-mortgage-related debt, lending standards or other factors,” Graboske said.






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