August Housing Scorecard: Encouraging but Continued Strain

October 6, 2011 (Chris Moore)

The housing market in August continued to show improvement brought on by seasonal selling trends and overall loan performance, which had stumbled in July, improved again in August according to the latest release of the Obama Administration’s Housing Scorecard.

Loan performance improved in August as delinquency rates decreased across the board. At the end of August, prime mortgages that were at least 30 days or more delinquent decreased to 4.4 percent from 4.5 percent in July and are down from their peak of 5.9 percent posted in 2010.

Performance of sub-prime mortgages also improved as loans that were 30 days or more delinquent decreased to 32.1 percent in August, down from 33.2 percent in July, and down from 36.2 percent reported a year earlier.

Delinquency rates of mortgages insured by the Federal Housing Administration (FHA) also declined in August to 12.1 percent, down from 12.2 percent in July. The delinquency rate on FHA loans a year ago was 12.4 percent.

Seriously delinquent prime mortgages, those that are 90 days or more past due, also showed improvement with 1.472 million loans in trouble at the end of August, down from 1.485 million in July and down from 1.694 million a year earlier.

Sub-prime mortgages that were seriously delinquent numbered 1.725 million in August, down from 1.728 million in July and down from 1.814 million in August of last year.

Loans insured by the FHA that were seriously delinquent increased to 612,000 in August, up from 599,000 in July and also up from 558,000 in August 2010.

Since the beginning of the Homeowner Affordable Modification Program (HAMP) in 2009 until the end of August 2011, over 5.1 million modification arrangements have been started. In August, 25,434 homeowners received a permanent loan modification through HAMP while 26,577 trial modifications were started raising the total amount of all permanent modifications started to 816,833.

To date, homeowners that have received a permanent loan modification through HAMP saved a median of $525 per month on their mortgage payment, more than a one-third of their median before-modification payment.

HOPE NOW proprietary modifications increased slightly in August to 55,828 modifications from a revised 55,687 modifications in July.

Home prices followed seasonal trends and were slightly higher in August compared to July but were still down from a year ago.

Sales of new homes declined by a seasonally adjusted 2.4 percent from July to August while sales of existing homes increased by a seasonally adjusted 7.7 percent.

Existing home inventory declined in August and along with an increase in sales dropped the inventory supply from 9.5 months in July to 8.5 months in August. New home inventory levels remained virtually unchanged with a 6.6 months supply of inventory available for sale.

Foreclosure starts jumped up almost 33 percent from July to August while Notice of Foreclosure Sales and foreclosure completions declined in August, but a constricted foreclosure pipeline led to a 26 percent decline in REO sales.

“We’re encouraged by the continued decline in mortgage defaults and recent trend in home prices, but we have much more work to do to help the market recover and to reach the many households across the nation who still face trouble,” said HUD Assistant Secretary Raphael Bostic. “More than 11.5 million homeowners have refinanced their mortgages since April 2009, putting a total of $20 billion a year in real savings in the hands of American families. As the President announced in his recent speech to Congress, to help responsible homeowners, we must make it easier for more people refinance at interest rates that are now near 4%. That alone can put more than $2,000 a year in a family’s pocket, and give a lift to our still-struggling economy.”

Tags: August Housing Scorecard, Obama Administration, loan modifications, mortgage delinquencies, trial modifications, prime mortgages, sub-prime mortgages, FHA

Source:
HUD
Treasury.gov