Foreclosure Lows Are the Needed Boost to Housing Stocks

Foreclosures and foreclosure inventory are definitively down. Compared to a year earlier, the foreclosure inventory nationally in August was 30 percent lower, while the actual number of completed foreclosures was down by more than 42 percent, according to CoreLogic’s August 2016 National Foreclosure Report.

In raw numbers, there were 37,000 completed foreclosures in August. A year ago, there were 64,000. The national foreclosure inventory included approximately 351,000 homes with a mortgage (about 1 percent) compared with 499,000 homes last year. The numbers made August’s foreclosure inventory rate the lowest it's been since July 2007.

CoreLogic also reported that the number of mortgages in serious delinquency (90 days or more past due, including loans in foreclosure or REO) declined by 20.6 percent from last August. The decline was geographically broad with decreases in serious delinquency in 48 states and the District of Columbia.

Over the year, Florida had twice the number of completed foreclosures (55,000) than its nearest second, Texas (27,000). Ohio, California, and Georgia also all had more than 20,000 foreclosures, and these five states made up about a third of all national foreclosures.

On the other side of the coin, the District of Columbia had the lowest number of completed foreclosures since last year, with 212. Conversely, D.C. also had the highest foreclosure inventory rate in August, almost 2 percent. Over the year, New Jersey’s 3.2 percent inventory rate led the way, followed closely by New York, with a 3 percent rate.

“Foreclosure inventory fell by 30 percent from the previous year, the largest year-over-year decline since January 2015," said Frank Nothaft, chief economist for CoreLogic. "The large decline in the distressed inventory has been one of the drivers of steady home price growth which helps Americans increase their home equity to support increased spending or cushion future economic risk."

Anand Nallathambi, president and CEO of CoreLogic, said that the downward trend in foreclosure and serious delinquency exhibit strong demand growth and rising prices."

"With the foreclosure inventory now under 1 percent nationally,” he said, “the need to boost single-family housing stocks through new construction will become more acute in the coming months and years."