The Mortgage Bankers Association reported this week that the four major measures of distress in the US housing market have reached their lowest levels since the sector crashed in 2008, as all four fell dramatically during the third quarter. The report showed steep dropoffs in not only foreclosure starts, but also in delinquency rates, serious delinquencies and loans in foreclosure, underscoring the momentum enjoyed by the market this year. All four of these measures are at their lowest levels since the onset of the worst economic downturn in the US since the Great Depression.
The MBA’s reading on the mortgage delinquency rate, which tracks all mortgages in which a borrower is 30 days late but not yet in foreclosure, fell to 6.41 percent in the three months ended October 31st, marking its lowest level since 2008′s 2nd quarter. Serious delinquencies, meanwhile, or those where the borrower is at least three months behind on payments, fell to 5.65 percent of all outstanding home loans. This figure includes homes that are in the midst of the foreclosure process, a category that accounted for 3.08 percent of US home loans last quarter. The impact distressed properties are having on prices is declining, as well, as short sales, foreclosures and other distressed homes only accounted for about 18 percent of sales last quarter, down from nearly a quarter of all sales in the same period in 2012.
In a separate report, RealtyTrac reported that foreclosure starts were initiated on just under 175,000 homes in the third quarter, marking the lowest total since the second quarter of 2006, at the onset of the crash. The figure represents a 13 percent decline from the previous quarter and a staggering 39 percent slide from last year’s third quarter. The improvement is rather wide-spread, as well, as 38 of the 50 US states saw improvement in foreclosure starts, led by California and Arizona, two of the states hit the hardest by the foreclosure crunch.