About $1.3 trillion in recently added equity vanished from the housing market during the third quarter, according to the report — the largest quarterly dollar decline on record. Equity among mortgaged homes dropped by about $1.5 trillion from its May peak — with the average borrower’s equity declining by about $30,000 from earlier this year.
“In the span of just three months, U.S. mortgage holders saw a total of $1.3 trillion in newly acquired equity evaporate,” said Ben Graboske, president of Black Knight Data & Analytics. “That is – by far – the largest quarterly decline on record by dollar value, and the largest since 2009 on a percentage basis.”
Tappable equity, which is the amount a homeowner can borrow against while keeping a 20% equity stake, hit an all-time high of $11.5 trillion in the second quarter of 2022. That figure declined by $1.17 trillion, or 10%, in the third quarter, “which may, along with rising rates, create headwinds for equity-related lending,” the report said.
Median home prices dropped 0.52% in September, continuing a three-month streak of declines, but slowed at half the pace of the previous two months. Annualized price appreciation slowed to 10.7% in September, a 1.2% drop from August, the smallest retreat seen in four months.
Despite the price corrections, home values in the nation’s 50 largest markets remain elevated by anywhere from 19% to 66% compared to the start of the pandemic.