October 5, 2016

Measuring Progress in the Housing Market

 

Housing Score Card

HUD’s monthly housing scorecard provides a snapshot of the state of our nation’s housing market, our programs’ performance, and areas for improvement. As we look back on September, we saw continued progress in our nation’s housing recovery. The latest data show growth among key indicators: a sharp gain in homeowners’ equity and a continued decline in the number of underwater borrowers. In addition, the September scorecard introduces HUD’s rental affordability index, which highlights the changes in rental affordability across the nation. While our housing market is on a healthy trajectory, it’s clear we must continue investing in programs that help more responsible Americans achieve the dream of homeownership.

Here’s a closer look:

Homeowners’ equity continues to show sharp gains. Homeowners’ equity (total property value less mortgage debt outstanding) was up $352 billion (2.8%) from the first quarter of 2016, for a total of more than $12.7 trillion–the highest level since the third quarter of 2006. Homeowners’ equity peaked at nearly $13.5 trillion in the first quarter of 2006. The increase in owners’ equity was nearly $332 billion in the first quarter. 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 $6.8 trillion (+107%) and equity has grown by more than $6.4 trillion since the end of 2011. (Source: Federal Reserve).

The number of underwater borrowers declined. As of the second quarter of 2016, CoreLogic estimated that 3.6 million homes, or 7.1 percent of residential properties with a mortgage, were in negative equity. This compares with 4.2 million, or 8.2 percent, that were reported in negative equity in the first quarter of 2015 and 4.5 million, or 8.9 percent, one year ago. From the beginning of 2012 through the second quarter of 2016, the number of underwater borrowers (those who owe more on their mortgage than the value of their home) has declined by 70 percent–from 12.1 million to 3.6 million—or by 8.5 million homeowners. (Source: CoreLogic).

Beginning with the September 2016 edition of the Scorecard, there is a new chart and table entry on the affordability of renting a home. Since the beginning of 2001, rising rents have outpaced income growth, eroding the affordability of renting a home. A HUD index on the affordability of renting a home shows that rental affordability began to decline during the second quarter of 2001, reached a low point at the end of 2010, and has shown modest improvement since. The rental affordability index is compared with NAR’s quarterly composite index on the affordability of owning a home. The affordability of purchasing a home, in contrast, rose from a low point in mid-2006 to a peak in the beginning of 2012 and has been on a downward trend since. The gap between the ability of a renter household with median income to lease a home compared with the ability of a family with median income to purchase a home peaked in 2012 and has been closing since.
The Administration’s programs continue to help struggling homeowners. In all, more than10.8 million mortgage modifications and other forms of mortgage assistance arrangements were completed between April 2009 and the end of August 2016. More than 2.7 million homeowner assistance actions have taken place through the Making Home Affordable Program, including more than 1.6 million permanent modifications through the Home Affordable Modification Program (HAMP), while the Federal Housing Administration (FHA) has offered more than 3.3 million loss mitigation and early delinquency interventions through August. These Administration programs continue to encourage improved standards and processes in the industry, with lenders offering families and individuals nearly 4.8 million proprietary modifications through July (data are reported with a two-month lag).

While this reflects good news overall, the Administration remains committed to helping more Americans realize their dream of home ownership through an improving economy and new programs that will provide greater access to credit.
This is just a brief overview of the September Housing Scorecard. For more information about the health of the housing market and how Administration programs are helping families please visit: www.hud.gov/scorecard.

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

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