Housing Tides Index™ June 2017 – Housing Data Shows Improvement as Mortgage Delinquencies and Foreclosures Fall to New Lows

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U.S. housing markets strengthened marginally this month as the Housing Tides Index rose to 72.3 from 71.8 in May. This represents a modest improvement over the Index value of 70.0 in June 2016, and 26 of the 41 metropolitan areas tracked recorded higher Index scores this month when compared to one year ago.

National Housing Tides Index™ Infographic June 2017

National Housing Tides Index™ Infographic June 2017

U.S. housing markets strengthened marginally this month as the Housing Tides Index rose to 72.3 from 71.8 in May. Market Highlights: mortgage delinquency down, rent increases may ease soon and new highs for post-recession home sales prices.

This week marks the release of the June Housing Tides Report™, featuring an update to the Housing Tides Index™, an objective and sophisticated approach to quantifying and comparing the health of U.S. housing markets. This month’s Index update reveals an improvement in housing market health as loan performance improved to the best levels in nearly a decade.

Understanding the health of a housing market and its relationship to other top markets requires an aggregated, comprehensive view of the industry. The Housing Tides Index provides a succinct monthly measure of market health across the top 41 U.S. markets. Referencing 18 market indicators ranging from unemployment rates and housing permits to rental vacancy and mortgage foreclosure rates, the Tides Index helps users understand exposure at a deeper level than is currently possible.

  • Black Knight Financial Services (BKFS) recently reported that the mortgage delinquency rate fell to 3.62% in March, and a review of historical U.S. mortgage delinquency data provided by the Federal Reserve Bank of St. Louis shows that this is the lowest rate of mortgage delinquency since late 2007. This continues the trend of mortgage market normalization, though delinquencies have not yet fallen to their pre-recession level of less than 3% of borrowers delinquent. On a similar note, BKFS reported a fall in the foreclosure rate to 0.88% of all mortgages, which is also a multi-year low. However, considerable differences in foreclosure rates remain among U.S. states. States with a judicial foreclosure process where proceedings must go through a court still have far higher foreclosure rates; judicial states New York and New Jersey had rates over 2.5% in March per the BKFS report, while non-judicial states Colorado and California recorded foreclosure rates of 0.2% and 0.3%, respectively.
  • After falling at the end of 2016, median asking rents for two-bedroom units have risen in two straight months according to latest data from Zillow. Still, with the asking rate at $1,575 per month nationally in April, rents remain below the peak of $1,750 seen June 2014. We expect rent price increases to ease in the near term given the high number of rental units under construction (U.S. Federal Reserve data show 612.1k housing units in buildings with five or more units under construction in April, the highest total since late 1974).
  • However, despite the large number of apartments approaching completion, upward pressure on rental prices should continue due to persistent tightness and rising prices in the for-sale market. Real estate brokerage Redfin reported that housing supply edged up slightly to 3.1 months of supply nationally in April while the median sales price reached a new high of $280k. 26 of the 41 metro areas tracked by the Tides team set new highs for nominal post-recession median sales price in April.
  • The Federal Housing Finance Agency reported that the U.S. effective mortgage interest rate for loans closed decreased to 4.1% in April after peaking at 4.4% in February. As such, mortgage interest rates are higher than the recent low of 3.72% seen just prior to the presidential election, though rates remain favorable when compared to the historical norm.
  • Single-family housing permits fell sharply in aggregate across the metro areas we track, totaling just 35,600 in April after reaching 40,100 in March. Multi-family permits increased in April, totaling 24,200, but the six-month moving average fell slightly to a rate of 23,500 permits per month.

Highlighting the Ten Healthiest U.S. Housing Markets - June, 2017 - Please reference the attached graph to view the Ten Healthiest U.S. Housing Markets.

Click here to view the complete Housing Tides Index of the top 41 U.S. markets.

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For deeper insights into the Housing Tides Index, read our most recent blog discussing the indicators which are necessary to assessing market health.

About Housing Tides

Housing Tides™ (“Tides”) is the only monthly report that provides a comprehensive measure and aggregated understanding of the health of the U.S. housing and home building industry. Designed to take the guesswork out of the vast amount of forecasting information published about this sector, Tides is a sophisticated report that delivers city-specific, updated information when market conditions change. It is the only report that uses natural language processing and machine learning to correctly understand and synthesize large volumes of data, making it more comprehensive, balanced, and reliable than any other report of its kind. For further information, please visit housingtides.com and connect on Twitter, Facebook and LinkedIn.

Housing Tides is proudly partnered with IBM Watson®.

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Hannah Finch

Sanaya Robles
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