Yearly home price appreciation has slowed for 10 months and month-over-month has been negative for four months.

The Black Knight Mortgage Monitor report for January 2019 shows a marked slowing in home price appreciation.

Mortgage Monitor Comments

• The average home declined in value by 0.3% (-$850) in December, marking the fourth consecutive monthly decline in home prices
• December marked the 10th straight month of slowing annual home price appreciation (HPA), falling from a high of 6.8% annual growth in February to 4.6% at the end of the year
• The average home is now down an aggregate of $2,440 (-0.8%) in value from August 2018
• With more than 50% of areas reporting, early numbers for January suggest we’re likely to see more of the same
• The annual growth is still outpacing the 25-year average of 3.9% - although the gap is closing quickly
• Falling rates continue to boost refinance incentives. Some 3.27 million homeowners with a mortgage could likely qualify for a refinance and reduce their interest rate at least .075% by doing so. That population is up nearly 75% from the 10-year low in November 2018, despite still being down 30% from late 2017 when rates were below 4%.

I asked Black Knight if they had seasonally-adjusted numbers or a longer timeline than shown in the report. The answers were no and yes respectively. Black Knight does not seasonally adjust numbers.

Home Price Index 2000-2019

Affordability

Home prices started soaring in the second half of 2012. The annual trend is growth at a slower pace.

Black Knight commented "declining prices and falling interest rates have made housing the most affordable it’s been since early in the 2018 home buying season. The recent decline in rates has translated into 6% more buying power while keeping monthly payments the same, or $62/mo. reduction in P&I on the average-priced home. It now takes 22.2% of median income to purchase the average home with 20% down and a 30-year loan, down from a post-recession high of 23.4% just a few months ago."

Affordability has not improved to any significant degree. Annual home price growth still exceeds annual real income gains.

The ability to refinance would lower the monthly payment for existing homeowners but it does not help or even apply to new home seekers.

Finally, more affordable than record high unaffordable a few months back does not mean much.

It would take a collapse similar to 2007-2012 before homes are even modestly-priced.