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Mixed News in Today’s Housing Market

Phil Hall
Jun 14, 2016

There was good news and not-so-great news in this morning’s residential market data reports.

First, the good news: the U.S. foreclosure inventory declined in April by 23.4 percent and completed foreclosures declined by 15.8 percent in comparison to April 2015, according to CoreLogic. On a year-over-year basis, the number of completed foreclosures dropped from 43,000 in April 2015 to 37,000 in April 2016.

CoreLogic determined that the national foreclosure inventory covered 406,000 mortgaged homes in April, or 1.1 percent of the complete housing market. This marks the lowest foreclosure inventory rate since September 2007. Furthermore, the number of mortgages in serious delinquency fell 21.6 percent year-over-year in April, 1.1 million mortgages, the lowest level since October 2007. The five states with the highest number of completed foreclosures in April—Florida (66,000), Michigan (47,000), Texas (27,000), Ohio (23,000) and California (23,000)—accounted for about 40 percent of all completed foreclosures nationally.

"The number of homeowners who have negative equity has fallen by two-thirds since its 2010 peak, and the number of borrowers in foreclosure proceedings has also continued to drop," said Anand Nallathambi, president and CEO of CoreLogic. "Despite this progress, about four million homeowners remained underwater at the end of the first quarter, and these borrowers are more vulnerable to foreclosure proceedings if they should fall delinquent."

Now, the not-so-good news: Separately, the Mortgage Bankers Association (MBA) Builder Application Survey data for May determined that mortgage applications for new home purchases dropped six percent from April. The MBA estimated that new single-family home sales were at a seasonally adjusted annual rate of 488,000 units last month.

Lynn Fisher, MBA’s vice president of research and economics, was not perturbed by this drop.

“Despite applications being down in May, each month this year has seen positive year over year growth in mortgage applications for new homes, and we expect modest growth in housing starts to be reported later this week as the spring building season continues, ” said Fisher. “While mortgage applications for new homes have declined almost 17 percent on an unadjusted basis from their peak in March of this year, applications in May remain eight percent above their level from the same time one year ago.”

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