Appraisals recorded in March fell short of homeowner estimates by a wider margin than in the previous month and previous year, according to the retail mortgage lender Quicken Loans. However, the typical estimate still fell within 1 percent of appraised values.

In the latest update of its Home Price Perception Index, Quicken Loans found that the average appraisal was 0.78 percent lower than the estimate provided by a homeowner. The gap between these values widened by more than 50 percent compared to February, when appraisals typically fell 0.5 percent lower than expected, and more than doubled compared to March 2018, when the average appraisal was 0.36 percent less than anticipated.

The typical appraisal has been lower than expected since early 2015, though the difference has been fairly minimal over the past year. Quicken Loans said the more pronounced widening of the gap between estimated and appraised values was largely due to a dip in home values at the start of spring.

"Homeowners are often reluctant to believe their house has lowered in value, even at a slightly monthly fluctuation," said Bill Banfield, vice president of capital markets at Quicken Loans. "Depending on the area, appraised values are either growing at a much more measured pace, or have taken a step back from their meteoric rise. Homeowners are usually slower to realize change—in either direction—than the appraisers who study the market on a daily basis. This can lead to a slight widening of the perception gap when there is a turn in the market."

The gap between expectations and appraisals was greatest in the Midwest region, where the average appraisal was 0.9 percent less than expected. It was 0.78 percent lower in the Northeast, 0.76 percent lower in the South, and 0.7 percent lower in the West.

Quicken Loans also looks at 27 major metropolitan areas to analyze value perceptions in these cities. The typical homeowner overestimated their property's value in 11 cities; this situation was most likely to occur in Chicago, where the average appraisal was 1.94 percent less than expected. On the other end of the spectrum, Boston appraisals were typically 2.23 percent higher than anticipated.

The Home Value Index maintained by Quicken Loans fell 0.2 percent from February to 111.78, although this also represented a year-over-year increase of 3.37 percent. A figure of 100 indicates that values are equal to those of January 2005.

Values were down on a monthly basis in the Northeast and South. In the former region, the index of 113.52 was down 0.19 percent from the previous month but up 3.65 percent from the previous year. The South had an index of 103.01, falling 1.45 percent from February but up 2.31 percent from March 2018.

In the Midwest, the Home Value Index was up 0.68 percent from the previous month and 4.11 percent from the previous year to 91.79. The West had an index of 136.57, up 0.79 percent from February and 2.79 percent from March 2018.

"Some of the rampant buyer demand that we've seen over the last few years has subsided because of the affordability issues many areas are having, driven by a lack of affordability," said Banfield. "Would-be buyers have decided to sit on the sidelines to see if more home inventory becomes available at the price points where they're shopping. The entire housing industry is watching to see what will happen in the coming months – whether owners and builders will provide the home inventory the buyers have been waiting for, amid the recent drop in interest rates."

Quicken Loans' Home Price Perception Index is based on data from refinance mortgages, where a homeowner provides an estimate of how much their property is worth and an appraisal is completed later in the process. The Home Value Index is based on a database of both purchase and refinance mortgages.