Economy Watch: Underwater Mortgages Drop, Non-Manufacturing Sector Expands
- May 06, 2014
Black Knight (formerly LPS) released its Mortgage Monitor report for March yesterday, reporting that 5.52 percent of U.S. residential mortgages were delinquent for the month, down from 5.97 percent in February (more than 30 days late, but not in foreclosure). Also, 2.13 percent of mortgages were in foreclosure in March, down from 3.38 percent a year earlier.
The report also noted that fewer homeowners now have negative equity than previously. Four years ago, about 34 percent of borrowers were in negative equity positions, according to Black Knight. As of March, that number had dropped to just about 10 percent of active mortgage loans.
“Two years of relatively consecutive home price increases and a general decline in the number of distressed loans have contributed to a decreasing number of underwater borrowers,” said Kostya Gradushy, Black Knight’s manager of Loan Data and Customer Analytics, in a statement. “Overall, nearly half of all borrowers today are both in positive equity positions and of strong credit quality – credit scores of 700 or above. Four years ago, that category of borrowers represented over a third of active mortgages.”
Non-Manufacturing Sector Continues to Expand
Economic activity in the non-manufacturing sector was up again in April, according to the Institute for Supply Management. The organization’s non-manufacturing index came in at 55.2 percent for the month, up 2.1 percentage points compared to March and indicating expansion.
Both the non-manufacturing Business Activity Index and the New Orders Index were up month-over-month, with business activity rising especially steeply: up 7.5 percentage points to a healthy 60.9 percent. New orders were up 4.8 percentage points, to 58.2 percent. According to ISM, the majority of survey respondents said that both business conditions and the economy are improving.
Fourteen non-manufacturing industries reported growth in April, including Arts, Entertainment & Recreation; Wholesale Trade; Retail Trade; Construction; Transportation & Warehousing; Finance & Insurance; Real Estate, Rental & Leasing; and Utilities. The four industries reporting contraction for the month were Mining, Health Care & Social Assistance, Professional, Scientific & Technical Services and Other Services.
Wall Street was down most of the day on Monday, but had an afternoon rally that put the Dow Jones Industrial Average up 17.66 points, or 0.11 percent. The S&P 500 gained 0.19 percent and the Nasdaq advanced 0.34 percent.