Housing Scorecard: Market Looking Stronger but Still Fragile

November 16, 2012 (Chris Moore)

Although the overall housing market looked rosier last month, a surge in mortgage delinquencies and a drop in existing home sales continued to show how fragile the market still is according to the October release of the Obama Administration’s Housing Scorecard.

Mortgage delinquency rates on prime, sub-prime and FHA mortgages worsened across the board in September with the delinquency rate of prime mortgages that were at least 30 days or more delinquent increasing from 3.8 percent in August to 4.2 percent in September. In September of last year, the delinquency rate was 4.4 percent.

Performance of sub-prime mortgages also worsened as the percentage of delinquent loans increased to 31.1 percent from 29.0 percent in August but was still down from 31.7 percent posted a year earlier.

Delinquency rates for mortgages insured by the Federal Housing Administration (FHA) also increased, climbing to 12.5 percent in September from 11.7 percent in August. The delinquency rate on FHA loans a year ago was 12.1 percent.

Seriously delinquent mortgages, those that are 90 days or more past due, improved in two of the three categories with the number of prime mortgages in trouble declining to 1.293 million loans in September, down from 1.311 million in August and down from 1.472 million a year earlier.

Sub-prime mortgages that were seriously delinquent numbered 1.554 million in September, down from 1.560 million in August. In September of last year, 1.707 million sub-prime mortgages were seriously delinquent.

Loans insured by the FHA that were seriously delinquent increased to 739,000 in September, up from 728,000 in August, and were 16.4 percent higher than the 635,000 delinquent loans in September 2011.

Loan originations for home purchases fell 4.4 percent from the second quarter of 2012 to the third quarter and were 16.6 percent lower than last year while refinance originations were up 31.3 percent from the second to the third quarter and were up 35.7 percent from the second quarter of last year.

Loan originations through the Federal Housing Administration (FHA) plummeted in September with refinance originations dropping 46.9 percent and purchase originations falling 28.8 percent while purchases by first-time homebuyers fell 17.5 percent.

Home prices continued to improve with all three of the indices used in the Housing Scorecard, Core-Logic, FHFA and the Case-Shiller Indices, posting pricing gains in both August and the previous year.

Sales of new homes increased by a seasonally adjusted 5.5 percent from August to September, while sales of existing homes fell by 1.7 percent.

Distressed property sales accounted for 22 percent of all re-sales in August, down from a revised 23 percent in July and down from 26 percent the previous year.

The inventory of existing homes listed for sell declined by 3.3 percent and the number of months supply fell slightly from the previous month to a 5.9 months supply of homes available for purchase. New home inventory declined from the previous month to a 4.5 months supply of homes for sale.

Foreclosure activity was mixed in September with foreclosure starts declining 12.3 percent and foreclosure sales increasing by 1.2 percent. Compared to a year ago, foreclosure starts and sales were both down with starts down 15.2 percent and foreclosure sales down 17.5 percent.

The estimated number of homeowners whose homes are worth less than what they owed declined to 10.8 million at the end of the 2nd quarter of 2012 from a revised 11.4 million at the end of the first quarter.

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

Source:
HUD