August Housing Scorecard Provides Mixed Report

On August 20, the Obama Administration released its monthly Housing Scorecard, which shows that despite some positive indicators, continued market instability suggests a recovery will take place over time.

This is the third 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 mortgage interest rates continue to plummet – down 70 basis points from a year ago and currently at their lowest levels on record – helping to increase the number of mortgage refinance and purchase originations from May to June. The low rates have been sustained, in part, by the Federal Reserve and Treasury MBS purchase programs.

In addition, the number of distressed borrowers assisted by FHA loss mitigation and early delinquency interventions and proprietary modifications under the HOPE Now program both rose from June to July. The pace of program entry has slowed under the federal HAMP program, as the number of homeowners receiving both permanent and trial HAMP modifications declined from June to July. The Administration attributes this decline to the June 1 implementation of new upfront documentation requirements, which are meant to streamline the application process and eventually help more eligible homeowners convert to a permanent modification.

Mortgage delinquency rates and the level of seriously delinquent mortgages both declined from June to July for prime and subprime mortgages; however, the rate and number of FHA mortgages facing delinquency increased from June to July.

Finally, 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.