Market Studies

Median prices for REO and short sale transactions continue to decline. A new report from CoreLogic shows distressed home prices at the national level have fallen 10 percent since 2009. The company notes, however, that new foreclosure auction filings have dropped significantly since last October, and the industry's shadow inventory has been trimmed. With these two distressed sale drivers narrowing, CoreLogic says such transactions will likely begin to decline late in 2011 and into 2012.

The rise in foreclosures in recent years may lead to long-term vacancies, further exacerbating housing prices and the market as a whole, according to Stephan Whitaker, a Cleveland Federal Reserve Bank researcher. In a recent study, Whitaker determined a strong correlation between foreclosures and vacancy rates, suggesting foreclosure may permanently scar some homes. He found that foreclosed homes still have higher vacancy rates than neighboring houses two to five years after a sheriff's sale.

For the second month since recording an official double-dip in home prices, the S&P/Case-Shiller index has posted an uptick. Data released Tuesday by Standard & Poor's shows that 16 of the 20 metros included in the study and both composites reported positive monthly increases. The 10- and 20-city composites were up 1.1 percent and 1.0 percent, respectively, in May over April. Detroit, Las Vegas, and Tampa were down over the month and Phoenix was unchanged.

Home prices, which have been sputtering along for much of the year, are likely to dip further by the end of 2011, according to the results of a nationwide industry survey of real estate agents. Factors cited as driving an expected decline include restricted financing for real estate investors, a large gap between the supply of distressed properties and demand from first-time homebuyers, and the shadow inventory of both foreclosed and short sale properties.

Less than half of homeowners - 49 percent - currently believe their home is worth more than the amount they still owe on their mortgage. July marks the second month in a row but only the third time since late 2008 that the Rasmussen Reports rate has fallen below 50 percent. High-income homeowners were more confident in their home values that low-income homeowners, and investors were more confident than owner-occupants. One-third of homeowners believe they are underwater with their mortgage, and 18 percent of respondents weren't sure.

Default rates on first and second mortgages dropped between May and June, and both measurements are down sharply from year-ago readings, according to S&P Indices and Experian. Their monthly assessment shows the default rate on first mortgages fell 7 basis points month-to-month and is 125 basis points below June 2010. Second-mortgage defaults slipped 2 and 101 basis points for the month and year, respectively. The results are based on consumer credit data from 11,500 banks and mortgage companies.

Despite the usual tendency for increases in the spring season - with highest increases occurring in May - Radar Logic's May RPX Composite Price remained almost identical to its rate in January. The RPX Composite Price did increase month-over-month in both April and May. However, the slight increases were not enough to offset January's more substantial decline. The report revealed a 5.9 percent decrease year-over-year in May, the largest year-over-year decrease since September 2009.

Sales prices of commercial real estate properties rose 6.3 percent in May, according to Moody's Investors Service. The agency's latest reading marked the first positive move in its property price index in six months and the largest one-month increase since Moody's began tracking commercial real estate prices in 2000. The firm's analysts attribute much of the turnaround to an increase in prices of distressed transactions, which rose 4.8 percent during May.

Interest rates on fixed-rate mortgage loans inched up this week amid mixed economic data, according to Freddie Mac. The GSE's weekly survey puts the average 30-year fixed rate at 4.52 percent for the week ending July 21, and the 15-year rate at 3.66 percent. Adjustable-rate mortgages (ARMs) were mixed in Freddie's latest survey. The company's analysts calculate average interest rates based on data from about 125 lenders across the country.

Home prices in the U.S. rose in May, marking the second consecutive monthly increase, the Federal Housing Finance Agency (FHFA) reported Thursday. Before the string of two-month gains, FHFA's market gauge had recorded declines in property prices for 10 straight months. The agency's monthly House Price Index (HPI) is calculated using purchase prices of homes backing mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac. It rose 0.4 percent from April to May.