Administration’s Housing Scorecard Points to Fragile Recovery

On July 20, the Obama Administration released its monthly Housing Scorecard, which showed that while federal stabilization initiatives have resulted in some positive trends, hopes for a quick recovery of the housing market remain bleak.

This is the second edition of the Housing Scorecard, the Administration's comprehensive report on the nation’s housing market released monthly by HUD and Treasury.  The report tracks the progress of the Neighborhood Stabilization Program (NSP), the Home Affordable Modification Program (HAMP), the Administration’s $23.5 billion HFA Initiative, and the Federal Reserve and Treasury MBS purchase programs.

The Scorecard reports that historically low mortgage interest rates, down more than 50 basis points from a year ago and currently at their lowest levels on record, continue to promote affordability and price stabilization.  These low rates have been sustained, in part, by the Federal Reserve and Treasury MBS purchase programs.  In addition, servicers report the number of homeowners receiving restructured mortgages continues to rise as HAMP permanent and trial modifications both saw increases in June compared to the prior month; perhaps one of many factors resulting in a decline in the number of underwater borrowers over the same period.  The Scorecard also reports that as more families have been able to remain in their homes, household assets have continued to grow; nearly $1.1 trillion in home equity has been gained since April 2009.

However, the report indicates “other data in the scorecard show that the recovery of the housing market remains fragile with the some measures suggesting recovery will take place over time.”  Since the expiration of the first-time homebuyer tax credit program in May, sales of new and existing home sales have declined substantially, as have the number of first-time homebuyers.  In addition, the stock of homes for sale remains near its historical peak, as the supply of available homes far outpaces purchaser demand.  Until this excess inventory is depleted, an increase in home sales is unlikely.