Nationally, home prices rose by 0.45% in March on a seasonally adjusted basis, slightly stronger than the revised 0.43% increase from the prior month.

“The strengthening in home prices is the direct result of a second month of modest increases in sales volumes meeting a continually shrinking for-sale inventory,” Andy Walden, Black Knight vice president of enterprise research, said.

Cities in the Midwest and Northeast — Columbus, Ohio (+1.1%); Hartford, Connecticut (+1.0%); Cleveland, Ohio (+1.0%); Cincinnati, Ohio (+0.9%) and Baltimore, Maryland (+0.9%) — saw the largest home price increases, along with Miami, Florida (+0.9), which is leading the South. 

The only markets in the top 50 by population where seasonally adjusted prices are still falling are Austin, Texas (-0.7%); Salt Lake City, Utah (-0.12%) and San Antonio, Texas (-0.07%). Phoenix, Arizona and Dallas, Texas are effectively flat month over month.

The annual home price growth, however, continues to cool. Prices were up just 1.0% on an annual basis, a backward-looking metric that has been falling by 1.3-1.4% each month since the start of 2023.

While the annual home price growth rate is on track to fall to roughly 0% by April, low inventory levels will limit just how far that metric will fall in the coming month, Walden noted. 

The supply of active listings fell for the sixth straight month in March, marking the lowest level since April 2022. March also saw a deterioration in supply in 90% of major markets.

New listings aren’t filling the gap either. In March, 30% fewer properties hit the market when compared to pre-pandemic norms.

Current available inventory represents just 2.6 months of supply on a seasonally adjusted basis, “tipping the scale back toward sellers in a tightly constricted market,” Walden said. 

Despite overall lower mortgage rates compared to March, recent weeks saw a pullback in purchase rate lock volume, according to Black Knight’s report. As of April 26, rates averaged 6.38% for the month, down from the 6.56% average daily rate for the month of March.

Rates remained volatile through March and April – dropping from a high of 6.85% in early March to 6.21% by early April. By mid-April, rates had climbed back up above 6.5%.

Purchase rate lock volume also fell 18% on an unadjusted basis in recent weeks. Refi volume has declined by 17% among cash-outs and by 24% among refi-term refis since mid- to late-March.

In addition, the national delinquency rate dropped 53 basis points in March to 2.92%, falling below 3% for the first time on record dating back to January 2000. The national delinquency rate was also down 13% year over year as of March.

The overall decline in delinquencies outpaced the typical March seasonal improvement of 10.5%, which was attributed to borrowers using tax refunds and other seasonal revenue to catch up on late payments, the report noted. 

Prepayment activity rose for the second consecutive month after hitting a record low of just 33 bps of single-month mortality (SMM) in January.

Housing turnover continues to drive the largest share of prepayment activity, accounting for 57% of SMM in March. Nearly two-thirds of the increase in prepayment speeds over the past two months can be attributed to the rise in housing-turnover-related prepayments, which were driven by both seasonal and rate-related pressures.

Seasonal pressures are likely to continue, as housing-turnover-related prepayments typically rise by more than 30% from March through June, which would translate to a 9-bps rise in SMM, according to the report.