April 2023 Mortgage Monitor

JACKSONVILLE, Fla. – June 5, 2022 – Today, the Data & Analytics division of ICE released its latest Mortgage Monitor Report, based on the company’s industry-leading mortgage, real estate and public records data sets. With the spring homebuying season defying historical norms, this month’s report looks at the intersection of affordability, inventory, demand and credit availability. As Vice President of Enterprise Research Andy Walden explains, the challenges facing homebuyers – and the real estate and housing finance industries more widely – are only becoming more deeply entrenched as the months go on.

“In a sense, the gridlocked housing market has been feeding on itself,” said Walden. “While elevated interest rates continue to weigh on both affordability and demand, they’re simultaneously constricting supply as well as would-be sellers who locked in ultra-low rates early in the pandemic continue to sit on the sidelines. The combination of lower supply and demand in April led to both slowing sales and firming prices. In fact, while home sales dipped, April marked the fourth consecutive month of home price gains, which are now almost universally rising across the country again on a seasonally adjusted basis. Only Austin, Texas – the sole market where inventory is back above pre-pandemic levels – is still seeing meaningful price corrections continuing into the spring. In today’s market, interest rates are acting as a double-edged sword, reducing or increasing both demand and supply as they rise and fall, making it challenging to find a rate-driven path to easing affordability and home prices.

“Amidst all of this, we’re also beginning to see clear signs of tightening credit availability. Our Optimal Blue rate lock data shows that average credit scores and down payments are on the rise, with tightening credit compounding the significant challenges already facing potential home buyers and the origination market alike. According to our McDash loan-level mortgage performance dataset, April purchase credit scores were the highest on record, dating back to 2000, when ICE first started tracking the metric. Pullbacks in purchase rate lock volumes have continued, dropping 11% from the week ending March 25 to the week ending May 20, in what would typically be the heart of the homebuying season. Indeed, purchase locks have fallen back down to more than 30% below pre-pandemic levels, after pulling to within 15% on rate dips in mid-January and mid-March. Demand is obviously suffering, and the fact that this spring’s strengthening home prices have erased more than 60% of the ‘correction’ seen late last year isn’t likely to help much on that front.”

This month’s report also dives deeper into housing market trends at the geographical level. Along the West Coast, where inventory levels have pulled back again this spring, prices have begun to rise again, reversing some of the correction in prices from late last year. San Jose, Calif. – among the metros that saw the largest price corrections in 2022 – ranked in the top 20% of markets in terms of single-month seasonally adjusted price gains in April (+0.8%), while San Diego prices were up by 0.9% and Seattle by +0.7% in the month. Hartford, Conn. (+1.3%) – the market with the largest inventory deficit nationwide, with 81% fewer active listings compared to pre-pandemic levels – experienced the largest single-month price gains, followed by Milwaukee (+1.2%), Detroit (+1.1%), Cleveland (+0.9%) – the most affordable market compared to its long-run average – Columbus, Ohio (+.9%), and Boston (+.9%). If sustained, Hartford’s monthly gains would equate to an annual home price growth rate of 15.3%, again sparking the risk of a reheating housing market should inventory shortages persist.