One in 10 American homeowners fell behind on mortgage payments or were in foreclosure during the third quarter as the world’s largest economy shed jobs and real estate prices tumbled.
The share of mortgages 30 days or more overdue rose to a seasonally adjusted 6.99 percent while loans already in foreclosure rose to 2.97 percent, both all-time highs in a survey that goes back 29 years, the Mortgage Bankers Association said in a report today. The gain in delinquencies was driven by an increase of loans with payments 90 days or more overdue.
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New foreclosures fell to 1.07 percent from 1.08 percent in the second quarter as some states enacted laws to temporarily stop home repossessions and lenders increased efforts to modify the terms of loans, Brinkmann said.
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Purchases of existing homes in October slid to an annual rate of 4.98 million, lower than forecast, the National Association of Realtors said in a Nov. 24 report. The median price fell 11.3 percent from a year earlier, the most since the group began collecting data in 1968.
Despite what my friend New Deal Democrat says the housing market is still years away from a bottom. The primary problem is the massive dislocation between supply and demand. Here is a graph from Calculated Risk of the absolute supply of homes on the markets:
Click for a larger image
Notice that on an absolute level, the inventory of existing homes for sale is mammoth. All of the homes in foreclosure will add to that level, which means the downward pressure on prices will continue for some time. Here is a chart (also from Calculated Risk) of the Case Shiller home price index's year over year percentage change in price.
Click for a larger image
Basically home prices are in free fall right now.
When the year over year percentage change in home prices stabilizes we'll be near a bottom in housing.
2 comments:
Actually, when YoY home prices stabilize we'll already have passed the bottom in housing (because the bottom point will be somewhere in the middle of that year).
I've followed up Friday's post with another installment this morning.
Housing prices are Nowhere near Bottom, and the change in Real Residential Investment hasn't started to stabilize yet. Friday's post was about noting the change in velocity of the trend in volume, not prices. Volume has taken the first step towards bottoming, and Volume will bottom first.
P.S. CR's graph above supports my point. The supply of houses for sale has been massive, but relatively stable (between 3.9m and 4.6m) for 20 months. For the last 4 months, 2008 volume has been not more than, or even less than 2007 volume. Months' supply is stabilizing, which is the first step from increasing supply to decreasing supply. That's the first step - and only the first step - on the road to a housing bottom.
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