July 2022 Mortgage Monitor

JACKSONVILLE, Fla. – Sept. 7, 2022 – Today, the Data & Analytics division of ICE released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage, real estate and public records datasets. The most recent data from the ICE Home Price Index shows the deceleration in home price growth on which the company has been reporting in recent months has shifted to actual decline. As ICE Data & Analytics President Ben Graboske explains, July’s month-over-month decline represents the first such contraction in nearly three years.

“After 31 consecutive months of growth, home prices pulled back by 0.77% in July,” said Graboske. “Annual home price appreciation still came in at over 14%, but in a market characterized by as much volatility and rapid change as today’s, such backward-looking metrics can be misleading as they can mask more current, pressing realities. Case in point – this cooling has been indicated in our home price data for several months now, and at an increasing pace. In January, prices rose at 28 times their normal monthly rate before slowing to five times average in February as interest rates began to tick up. Even May was still about two times normal, before June growth came in 70% below the long-run average. And all the while, annual appreciation continued to appear historically strong, showing double-digit growth month after month. Without timely, granular data, market-moving trends don’t become apparent until they’re right in front of you – like a sudden shift to the largest single-month decline in home prices in more than a decade.

“Similarly, while mortgage-holders’ tappable equity had grown 25% from last year to hit yet another record high in Q2, we noted that equity actually peaked in May and tracked the pullback that began in June before escalating in July. Tappable equity is now down 5% in the last two months, setting up Q3 to likely see the first quarterly decline in tappable equity since 2019. Some of the nation’s most equity-rich markets have seen significant pullbacks, most notably among key West Coast metros. From April through July, San Jose lost 20% of its tappable equity. Seattle followed, shedding 18% of tappable equity over that same three-month span. Likewise, San Diego (-14%), San Francisco (-14%) and Los Angeles (-10%) have all seen double-digit declines since April. Keep in mind that of the roughly 275K borrowers who would fall underwater from a 5% price decline, more than 80% purchased their homes in the first six months of 2022 – right at what appears to have been the top of the market. With prices continuing to correct and our McDash HELOC data showing home equity lending at its highest level in 12 years, we will keep a very close eye on equity positions in the coming months.”

The month’s report looks again at the inventory side of the housing supply/demand equation. Falling housing demand continued to allow inventory levels to build for the fifth month in a row, with July marking the third consecutive record-breaking increase. Despite a 128K rise in active listings, inventories remain 622K (45%) below 2017-2019 levels. ICE Collateral Analytics data shows 3.1 months’ worth of inventory as of the end of July, up from 1.7 months at the beginning of the year. If sales continue to fall at the rate they have the past four months and listings continue to build at their current pace, inventory would cross the six-month threshold by December – typically the point at which the landscape shifts from a seller’s to a buyer’s market.

Much more localized information on these and other topics can be found in this month’s Mortgage Monitor.