Annual home price growth shifted from deceleration to decline in July as the median home price dropped .77% from June, the largest single-month decline since January 2011, according to Black Knight’s latest Mortgage Monitor Report

July’s substantial month-over-month decline in tappable equity is the first of its kind in nearly three years, Black Knight Data & Analytics President Ben Graboske said in a statement. 

Additionally, more than 85% of the 50 largest U.S. markets “are at least marginally off their peaks” through July, with home prices down by more than 1% in a third, and more than one in 10 seeing prices fall by 4% or more, according to the data.

Tappable equity, the amount a homeowner can borrow against while keeping a 20% equity stake in the home, hit its 10th consecutive record high in Q2 at $11.5T, but appears to have peaked back in May. 

“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,” Graboske said, adding that in some markets, equity pullbacks have quickly become “fairly significant.”

The five most equity-rich West Coast markets lost 10-20% of previously available tappable equity from April through July.

  • San Jose lost 20% of its tappable equity
  • Seattle, 18%
  • San Diego, 14%
  • San Francisco, 14%
  • Los Angeles, 10%

The impact of home price declines is twice as pronounced on tappable equity levels. For instance, a 5% decline in home values nationally would equate to a 10% decline in tappable equity, Black Knight said. 

Overall, the data showed that the market is on strong footing to make it through a correction, according to the report—total market leverage as of Q2, including both first and second liens, was just 42% of mortgaged homes’ values, the lowest on record.

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