Economy Watch: MBA Reports Fewer Homes in Foreclosure

3 min read

MBA reports that mortgage foreclosures dropped in 1Q11; NAR reports that existing home sales dropped in April; and the Conference Board's index shows leading indicators down in April.

The Mortgage Bankers Association said on Thursday that U.S. mortgage foreclosures dropped during the first quarter of 2011 compared with the last quarter of 2010. During 1Q11, the share of home loans in some stage of foreclosure was 4.52 percent, down from 4.64 percent during 4Q10.

“Of particular importance is that the drop in the percentage of loans 90 days or more past due was driven by improving numbers for loans originated between 2005 and 2007,” Jay Brinkmann, MBA’s chief economist, says in a statement. “These are the loans that drove the mortgage market collapse and now represent about 31 percent of loans outstanding, but 65 percent of the loans seriously delinquent.”

So nationally speaking, things are improving. But real estate markets are more localized than that, and some places are still hurting very badly in terms of mortgage delinquencies. Take Florida, for example. According to the MBA, 24 percent of all mortgages in the country that are in foreclosure are in Florida, and 23 percent of the loans in Florida are anywhere from one payment past due to in foreclosure.

Existing housing sales drop in April

The National Association of Realtors reported on Thursday that existing home sales–single-family, townhomes, condominiums and co-ops–declined 0.8 percent to an annualized rate of 5.05 million units in April from a downwardly revised 5.09 million units in March. The April 2011 figure is also down 12.9 percent compared with April 2010, but that’s hardly meaningful, since sales surged in April and May of 2010 in response to the federal homebuyer tax credit.

Total housing inventory at the end of April increased 9.9 percent to 3.87 million existing homes available for sale, which represents a 9.2-month supply at the current pace of sales, up from an 8.3-month supply in March, notes the NAR. First-time buyers purchased 36 percent of homes in April, up from 33 percent in March; but they were buying 49 percent of them in April 2010 when the tax credit was in place. Investors slipped to 20 percent in April from 22 percent of purchase activity in March; and they were only 15 percent in April 2010, presumably since the tax credit did not apply to them.

A separate NAR practitioner survey released this week shows that 11 percent of Realtors report that a contract was cancelled in April from an appraisal coming in below the price negotiated between a buyer and seller. Low appraisals also meant that 10 percent of the respondents had a contract delayed, and 14 percent said a contract was renegotiated to a lower sales price because of a low appraisal.

Leading indicators take a dip

The Conference Board said on Thursday that its Leading Economic Index declined 0.3 percent in April to 114.0 (2004 = 100), following a 0.7 percent increase in March and a 0.9 percent increase in February. The index had been rising each month for almost a year now.

Dragging things down for the index were the likes of weekly initial claims for unemployment insurance benefits, fewer building permits, a shorter factory workweek, and lower new orders for nondefense capital goods and consumer goods. Some positive components of the index included consumer expectations, real money supply and stock prices.

Wall Street seemed moderately cheerful on Thursday after LinkedIn’s strong IPO and its first day of trading, with the Dow Jones Industrial Average gaining 45.15 points, or 0.36 percent. The S&P 500 was up 0.22 percent, and the Nasdaq gained 0.3 percent.

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