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Delinquencies on Pace for Return to Pre-Pandemic Levels

Housing has not been so unaffordable since 2018, the national delinquency rate is improving, and foreclosures are way down, for now, according to new numbers from Black Knight, whose monthly Mortgage Monitor Report looks at a variety of issues related to the mortgage finance and housing industries.

April's report showed the highest annual home price growth rate on record since it began tracking the metric in the mid-1990s. Black Knight reported that this marks the 17th consecutive month of home price increases, with the growth rate accelerating sharply in recent months as inventory challenges continue to put upward pressure on prices.

The national delinquency rate improved in April, dropping to 4.66%. "At the current rate of improvement, delinquencies could return to pre-pandemic levels by year's end," reads April's report. "... while the number of loans 90 or more days past due also saw strong improvement, down 151,000, there are still four times as many such serious delinquencies as there were prior to the pandemic, though the vast majority are in forbearance."

As for foreclosures, just 3,700 were initiated in April for a total of 153,000 loans in active foreclosure today. "Widespread moratoria and extended forbearance utilization continue to limit foreclosure activity," Black Knight's researchers reported.

Black Knight's latest forbearance report, summary available here, is included in this month's mortgage monitor report—it showed the overall number of loans in active forbearance has dipped to 2.18 million. June marks the final quarterly review before early forbearance entrants begin to reach their 18-month plan expiration; 830,000 plans are currently slated for review for extension or removal in June this month.

Black Knight Data & Analytics President Ben Graboske says a dwindling inventory of homes for sale is pushing home price growth rates to previously unseen levels.

"Home prices grew at 14.8% on an annual basis in April," said Graboske. "That's the highest annual home price growth rate we've ever seen – and Black Knight's been tracking the metric for almost 30 years now. Single-family homes saw the greatest gains, with prices up 15.6% from last April, also an all-time high, while condo prices are up 10%. Driving this growth are two key elements: historically low interest rates and—more acutely—the lack of available-for-sale inventory. The total number of active listings was down 60% from the 2017 to 2019 average for April. It's not getting any better, either. Data from our Collateral Analytics group showed there was two months' worth of single-family inventory nationwide in March, the lowest share on record and trending downward. In fact, there were 26% fewer newly listed properties in April as compared to pre-pandemic seasonal levels.

"Of course, such aggressive home price growth has had an impact on affordability levels, even with interest rates back under 3% and within roughly a quarter point of historic lows. Entering June, the share of the median income needed to make the monthly payments on the median-priced home had risen to 20.5%. While still more affordable than the 25-year average of 23.6%, housing has surpassed its 5-year average of 20.1% even with interest rates back below 3%. In recent years, 20.5% has roughly been the tipping point at which appreciation begins to decelerate, but given the severity of inventory shortages, home prices have – at least for now – continued to sharply accelerate even in the face of tightening affordability."

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Contact Christina at [email protected].

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