August Housing Scorecard Shows Recovery Progress

The Administration's August Housing Scorecard, released last week, details an improving picture of the nation's housing market.  According to the report, 2012 has brought both a rise in home prices and a decline in foreclosure starts, although officials caution that the housing recovery remains fragile.

For the first time since September 2010, the Case-Shiller index showed an annual increase in national home prices.  Due in large part to the small rise in home prices, the number of underwater borrowers fell by 11 percent, from 12.1 million to 10.8 million, from the fourth quarter of 2011 through the second quarter of 2012.  The overall share of underwater mortgages declined from 25.2 percent to 22.3 percent.

New and existing home sales are on the rise, according to the report.  New home sales grew from 29,900 in June to 31,000 in July and existing home sales increased from 364,200 in June to 372,500 in July.  Originations of mortgage refinance loans are also on the rise, with 1,348,500 completed in the second quarter, an increase of 133,500 from the first quarter of the year.

In a related sign of improvement, mortgage delinquency rates fell this summer along with the number of seriously delinquent mortgages.  The delinquency rate for prime mortgages dipped to 4.0 percent in July, while the subprime rate dropped to 29.1 percent.  The number of foreclosure starts also dropped, from 64,100 in June to 60,600 in July.  The decline in the number of foreclosures might not continue, however, as many delinquent home loans in the foreclosure pipeline begin working through the system.

Along with the housing scorecard, the Administration also released the monthly report on the Making Home Affordable program and its progress through July 2012.  As of July, more than one million homeowners have received a permanent modification on their mortgage through the Home Affordable Modification Program (HAMP), and 77 percent of eligible borrowers entering the program in July received some form of principal reduction.  A quarterly servicer assessment by Treasury found that nine servicers required minor or moderate improvements to their program performance, while errors were declining overall.