January 11, 2017

Measuring Progress in the Housing Market

Photo: Row of homes.

Since January 2011, HUD has published a monthly Housing Scorecard that provides a snapshot of the latest developments in the American housing market, and tracks how the initiatives of the Obama Administration have helped improve the lives of American homeowners. This month’s Scorecard is the last edition we will publish before we transition to a new Administration, so I would like to take a few moments to reflect upon how far our market has come since the depths of the Great Recession.

When President Obama first took office, home values were plummeting and foreclosure rates had reached their highest point in history. But since then, the housing market has experienced a resurgence.  As President-elect Trump prepares to take office, American homeowners have built roughly $7 trillion in housing wealth, while existing home sales have reached their highest levels in almost a decade.

At HUD, we’re proud of the role we played in making this comeback possible. The FHA took decisive action to stabilize the market at the height of the crisis. We’ve also worked with leaders across this Administration and throughout the government to provide greater security for American homeowners through measures like tax credits for homebuyers, neighborhood stabilization and community development programs, improved mortgage modifications and refinancing policies, and increased consumer protections.

During the month of December, we continued to witness the positive impact that the Obama Administration has made, as the market demonstrated notable progress among several key indicators.  Here’s a look at some of the top overall trends:

  • Purchases of new homes were up in November. New single-family home sales rose 5.2 percent in November to 592,000 (SAAR) from a 563,000 pace in October and were up 16.5 percent over a year earlier. New home sales have averaged 563,000 (SAAR) so far in 2016, well above the 501,000 annual rate for all of 2015. Note that monthly data on new home sales can be volatile and are often revised. (Source: HUD and Census Bureau).
  • Sales of previously owned (existing) homes rose for the third consecutive month in November. The National Association of Realtors® (NAR) reported that sales of existing homes (including single-family homes, townhomes, condominiums, and cooperatives) rose 0.7 percent in November to 5.61 million (SAAR), the highest level since February 2007. Sales were up 15.4 percent from a year ago. Existing home sales have averaged 5.43 million (SAAR) so far in 2016, moderately above the 5.25 million annual rate for all of 2015.
  • Homeowners’ equity continued to show sharp gains in the third quarter. Homeowners’ equity (total property value less mortgage debt outstanding) was up $383 billion (3.0%) from the second quarter of 2016, for a total of more than $13.0 trillion–the highest level since the second quarter of 2006. Homeowners’ equity peaked at more than $13.4 trillion in the first quarter of 2006. The change in equity since April 1, 2009, when the Administration initiated its broad set of actions to stabilize the housing market, now stands at nearly $7.1 trillion, and equity has grown by nearly $6.8 trillion since the end of 2011. (Source: Federal Reserve).
  • The number of underwater borrowers continued to decline. As of the third quarter of 2016, CoreLogic estimated that 3.2 million homes, or 6.3 percent of residential properties with a mortgage, were in negative equity. This compares with 3.6 million, or 7.1 percent, that were reported in negative equity in the second quarter of 2016 and 4.2 million, or 8.4 percent, one year ago. From the beginning of 2012 through the third quarter of 2016, the number of underwater borrowers (those who owe more on their mortgage than the value of their home) has declined by 74 percent–from 12.1 million to 3.2 million—or by 8.9 million homeowners. (Source: CoreLogic).

Federal programs and policies continue to help struggling homeowners. In all, nearly 11.1 million mortgage modifications and other forms of mortgage assistance arrangements were completed between April 2009 and the end of November 2016. Nearly 2.8 million homeowner assistance actions have taken place through the Making Home Affordable Program, including more than1.6 million permanent modifications through the Home Affordable Modification Program (HAMP), while the Federal Housing Administration (FHA) has offered more than 3.4 million loss mitigation and early delinquency interventions through November. These programs continue to encourage improved standards and processes in the industry, with lenders offering families and individuals nearly 4.9 million proprietary modifications through October (proprietary data are reported with a 2-month lag).

This is just a brief overview of the December Housing Scorecard. For more information about the health of the housing market and how we have helped support American homeowners, please visit: www.hud.gov/scorecard.

It has been my honor to serve at HUD during a time when housing markets have been central to the economic health of the nation.  And as President Obama prepares to leave the White House, I hope the next Administration will find the Housing Scorecard a useful mechanism for tracking housing market conditions, and continue to expand housing opportunity for the American people.

Katherine O’Regan is the Assistant Secretary for the Office of Policy Development and Research.

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