Three of the nation’s hottest housing markets are unsurprisingly seeing the most significant signs of cooling, according to data and analytics company Black Knight.
According to just released numbers, May marked the second consecutive month of cooling at the national level. As mortgage rates continue to climb along with record-hime home prices, home affordability is at its worst point since the mid-1980s.
But some markets may be approaching their tipping point.
While all major markets still face inventory deficits, San Francisco, San Jose and Seattle are among the markets seeing the strongest levels of cooling so far this year, according to Black Knight. Annual home price growth rates in each are down more than three percentage points in recent months.
In May, San Jose’s home sale prices dropped 0.5 percent from a year ago—the largest drop in the nation.
“The annual home price growth rate fell by more than a full percentage point in May, the largest monthly decline at the national level since 2006,” Black Knight Data & Analytics President Ben Graboske said. “However, even with growth slowing in 97 of the top 100 U.S. markets, overall home prices still rose 1.5 percent from April—nearly twice the historical average for the month of May. And while any talk of home values and 2006 might set off alarm bells for some, the truth is that price gains would need to see deceleration at this rate for more than 12 months just to get us back to a ‘normal’ 3-5 percent annual growth rate. That said, the pace of deceleration could very well increase in the coming months, as we’ve already begun to see in select markets such as Austin, Boise and Phoenix.”