The State of Our Current Housing Market

Mortgage rates have continued to drop, home prices have increased

, the number of borrowers 60 days or more delinquent on their mortgage payments has decreased, mortgage applications for home purchases have risen, that's about where the good news ends. New and existing home sales fell, inventories of unsold homes have risen, construction spending has dropped, new foreclosure initiations have increased, the number of newly distressed loans has increased and the progress of the Obama administrations HAMP program slowed.

Mortgage rates have continued to set record lows. The 30 year fixed rate mortgage averaged 4.32% for the week ending September 2nd, according to Freddie Mac. That is the lowest on record since Freddie Mac began tracking mortgage rates in 1971. That makes it now 11 weeks where the mortgage also hit a record low with an average posted by Freddie Mac at 3.83%

According to the most recent data from the S&P/Case-Shiller 20 city home price index, home prices increased 1% from May to June of this year. While that's an increase of 4.2% when compared to the previous year, it's still down 28.4% from the peak home prices of July 2006.

Borrower delinquency figures from the Mortgage Bankers Association that reflect data from July show that delinquency rates where borrowers missed at least one payment or were in foreclosure were at 14.4% of all borrowers in July. That's a decrease of 0.3% from June's data, reflecting a 14.7% delinquency rate for the nation's borrowers. The drop was represented by the decreased in the number of borrowers that were 60 days or more delinquent. However, the number of newly distressed borrowers increased for the month of July.

As a result of the record low interest rates, mortgage applications saw a brief increase of 1% for the third week of August.

The sale of existing homes during the month of July fell 27.2% from June, according to the National Association of Realtors. That puts the seasonally adjusted annual rate of new homes for sale at 276,000 units. That increased the supply to 9.1 months and is the lowest sales data recorded since tracking started in 1963.

Spending on construction for the month of July fell 1% from June. That drops the seasonally adjusted annual spending rate to $805.2 billion for July.

The Obama administration's HAMP program, which was supposed to help nearly 4 million struggling borrowers with mortgage modifications has not lived up to expectations. HAMP had a rough July with more cancellations than new trial modifications. According to the Treasury Department, roughly 17,000 borrowers received new trial modifications and nearly five times that (96,025) had their temporary modifications cancelled. Total cancellations as of July were 616,839. Total permanent loan modifications through the HAMP program through July were 434,716.

The housing market is showing some signs of recovery. We might learn a great deal in the coming months. Because the inventories are continuing to increase due to bank owned foreclosure hitting the market and home sales continuing to slide, prices will likely take a hit before the end of the year.

The State of Our Current Housing Market

By: Paul Escobedo

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