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The Office of Economic Policy

HOUSING DASHBOARD
May 17, 2016
The housing recovery continues to support broader economic activity. Residential investment
rose at an annual rate of 15 percent in 2016Q1, contributing 0.5 percentage point to GDP
growth. Meanwhile, residential construction employment has continued to rise steadily.
Single-family housing starts appear to remain on a gradual uptrend, but multifamily starts have
pulled back somewhat from the strong levels seen in the first half of last year.
National home price appreciation has moderated—from a double-digit pace in late 2013 and
early 2014 to a more sustainable mid-single-digit pace now. That said, home price valuations
look to be somewhat elevated relative to pre-bubble norms. Housing affordability for the
typical family has diminished considerably because of the rebound in home prices but remains
high by historical standards because of very low mortgage rates.
Although some mortgage borrowers continue to struggle in the wake of the crisis, delinquency
and foreclosure rates are closing in on their pre-crisis ranges. The number of distressed sales
continues to drop, and the number of underwater borrowers is down by nearly two-thirds since
2011.
This month’s dashboard includes a special topic that explores housing supply conditions in the
United States, including the availability of homes for sale and how supply conditions appear to
be affecting different geographies and market segments.

Housing Market Flash

May 2016

Housing Market Flash
Tuesday, May 17, 2016

Pre-bubble
norm
(2000-2002
Current
average) Trough
level
Single-family homes
New

921

Sales
Existing

(thousands)

Inventory of homes
available for sale
(thousands)

New
Existing

4,779
311
1,836

Housing starts

1,289

Building permits

1,257

CoreLogic HPI

115.7

Construction activity
(thousands)

270
Feb-11
3,060
Jul-10
142
Jul-12
1,550
Dec-15
353
Mar-09
337
Jan-09

511
Mar-16
4,760
Mar-16
246
Mar-16
1,740
Mar-16
778
Apr-16
736
Apr-16

(index, Jan 2000 = 100)

Inflation-Adjusted

Housing affordability

127

190.0

101.9

139.3

8.5%
6.1%
21
thousands

-47
thousands

13.4%
9.9%
5.4%

Improved
Improved
Weakened
Improved
Improved

-44.5%
-0.4%
-65
thousands

-96
thousands

-39.6%
-41.5%

Mar-16

6.3%

101.1

169.3

Jul-06

(NAR, index=100 when median family income qualifies
for 80% LTV mortgage on a median priced home)

Improved

Mar-16

Nov-11

111.6

CoreLogic HPI

137.3
Nov-11

Prices

Current 12-month
average versus yearearlier value

Current level
versus prebubble norm
(2000-2002
average)

Mar-16

8
Jan-09

58
May-16

point(s)

117
Oct-08

156
May-16

point(s)

Improved
Improved

-2.6%

64.2%
24.8%
33.7%

Weakened

Sentiment
59

Homebuilder
(NAHB, over 50 means majority view conditions
positively)

Home-buying conditions

152

(Reuters/Umich, index = good time - bad time + 100)

5

-1
Improved

point(s)

Weakened

point(s)

Weakened

thousands

-3

4

Demographics
Household formation

1,113

(thousands)

Homeownership rate
(percent)

67.7

100
541
2008-Q4 2016-Q1

-261
thousands

-572

63.5
63.6
-0.6
-4.1
2015-Q2 2016-Q1 percentage point(s) Weakened percentage point(s)

1

Special Topic: Housing Supply Conditions
Since 2012, the inventory of unsold
single-family homes has been 9 to
13 percent below its pre-bubble average.
This shortfall mostly owes to fewer existing

May 2016

Unsold Single Family Homes

Millions of units

New Homes

3.5

Existing Homes

3.0

homes for sale, which typically make up the
bulk of sales inventories. In 2015, the total

2.0

number of unsold homes sat at 1.8 million,

Average 1990 - 2003

2.5

1.5

the second lowest it has been in 22 years.

1.0
0.5
0.0
'90

The current low level of the inventory to
sales ratio is also suggestive of a low
supply of homes for sale. In a balanced
housing market, where the supply of homes

'92

'94

'98

'00

'02

'04

'06

'08

'10

'12

'14

Single Family Home Inventory-to-Sales Ratio
10

8

for sale is sufficient to meet the implied
demand for homes given by demographics

'96

Source: National Association of Realtors, Census Bureau, Haver Analytics & Treasury calculations.

Average 1990 - 2003

6

and demolitions, it typically takes six to
seven months to exhaust the available
inventory of homes for sale. During the
housing crisis, housing supply expanded
and sales volume declined, increasing the
inventory to sales ratio to a peak of 8.7 in
2008. By 2015, the ratio fell to 4.2, below its

4

2

0
'90

'92

'94

'96

'98

'00

'02

'04

'06

'08

'10

'12

Source: National Association of Realtors and Census Bureau.

pre-bubble average.

Homes-for-Sale Inventory as a Percent of

The number of homes for sale as a percent

Households

of the number of households remains
below pre-bubble levels. During the late
1990s and early 2000s, there were around 2 to
2.5 homes for sale for every 100 households.
This figure increased to nearly 4 homes for
sale per 100 households during the housing
bubble. In more recent years, this figure has
dropped to below 2 homes per hundred
households.
Source: CoreLogic.

2

'14

Special Topic: Housing Supply Conditions
Housing vacancies are down to
1.9 percent, approaching their prebubble average of 1.6 percent. The
vacancy rate measures the number of
vacant homes for sale as a percent of the
housing stock that could be owneroccupied. Lower rates of housing vacancies
indicate a tighter housing market, as there
are fewer homes on the market as a
proportion of the total housing stock.

May 2016

Housing Vacancies

Percent

3.0
2.5
2.0

Average 1990 - 2003

1.5

1.0
0.5
0.0
'90

'92

'94

'96

'98

'00

'02

'04

'06

'08

'10

'12

'14

Source: Census Bureau

Housing vacancies vary considerably by state. Among those with low vacancies, shaded in light
blue, many are western states like Utah, South Dakota, and Wyoming that were less affected by the
housing crisis and have had consistently low vacancies over the past ten years. Other states with low
vacancies include North Dakota and Texas, where net migration has been positive due to the oil and
gas boom. States with high vacancy rates include New Jersey and Florida, where the foreclosure
inventory remains elevated due to delays in processing foreclosures.

Housing Vacancies by State, 2015Q4

Source: Census Bureau. AK vacancy rate 2.3, HI vacancy rate 1.4.

3

Special Topic: Housing Supply Conditions

May 2016

The size of newly built homes has changed in
recent years, with the construction of smaller
homes lagging behind historical levels.
Before 2003, homes less than 1600 square feet,
typically considered starter homes, accounted
for around 30-40 percent of the market, while
homes greater than 3000 square feet were
around 15 percent. Since 2011, 30 percent of
newly-built units have been large homes, while
the starter market share has been just 15
percent. Damped construction of smaller units
is limiting starter home availability for first-time

Source: Calculated Risk and Census Bureau.

homebuyers.

Cumulative Price Growth Through January 2016
by Price Tier

Price increases have been strongest for homes
priced below the median, reflecting in part the
slowdown in new construction of starter homes.
Since the recession, the least expensive homes (less
than 25 percent of the median home price) have
seen prices rebound more than 50 percent (gray
bars) through January 2016, compared with just
under 30 percent for homes priced more than 25
percent above the median. In the year ending
January 2016, the least-expensive homes posted 10

Source: CoreLogic.

percent price gains (red bars) versus 4 percent for
the most expensive homes.

Land Use Restrictions and Number of
Adults per Household

Restrictive land-use regulation is one explanation
for why the supply of starter homes has lagged.

Least restrictive

Less restrictive

More restrictive

Most restrictive

2.2
2.14

Typically, rising prices signal to builders that new
2.09

construction is likely to be profitable. However,

2.09

2.1

restrictive land-use regulations discourage building

2.03

and tilt construction in favor of more expensive

2.13
2.07

2.04

1.99
2.0

homes, both of which worsen affordability. With
rising housing costs, more adults are likely to share
their home with family or friends. Compared to 2011,
the number of adults per household in 2014 rose by
slightly more in cities with more restrictive regulations.
4

1.9

2011 2014

Source: Zillow

2011 2014

2011 2014

2011 2014

Housing’s Importance to the Economy
Residential investment continues to
support GDP growth. Residential
investment rose at an annual rate of
15 percent in 2016Q1, adding

Percent

10.0

May 2016

Residential Investment's Contribution to
Real GDP

8.0
6.0

0.5 percentage point to real GDP growth,

4.0

surpassing the 0.3 percentage point

2.0

average contribution over the previous four

0.0

quarters. (The recent flatness in housing
starts will take some time to be reflected in
residential investment because of the lags
associated with construction.)

-2.0
-4.0
-6.0

GDP (% Change, Annual Rate)
Residential Investment's Contribution

-8.0
-10.0
'00

'02

'04

'06

'08

'10

'12

'14

Source: Bureau of Economic Analysis

Employment in residential construction
continues to recover. Over the past year,

Employment in Residential Construction

Millions

Percent

4.0

4.0

it has increased by 11,700 jobs per month,
compared with 12,500 jobs per month in
the year-earlier period. The level of
employment remains relatively low:
residential construction employment
totaled just under 2.6 million workers in
2016Q1, accounting for roughly 2.1 percent
of total private payroll employment,

Number Employed (left scale)
Share of Total Private Employment (right scale)

3.5

3.5

3.0

3.0

2.5

2.5

2.0

2.0

1.5

1.5

early 2000s.

'02
'04
'06
'08
'10
'12
'14
'16
Note: Includes those employed directly in residential construction as well as related
specialty trades.
Source: Bureau of Labor Statistics

Housing wealth is nearing its earlier

Trillions

compared with around 2.6 percent in the

peak. The value of household real estate
reached $22.0 trillion in 2015Q4, up from a
low of $16.2 trillion in 2011Q4. The current
level is close to its 2006Q4 peak, but the

Household Real Estate and Net Equity

25

Percent

Market Value of Real Estate (left scale)
Net Equity (left scale)
Equity's Share of Value (right scale)

75

20

65

15

55

10

45

5

35

sustainable level is higher than in 2006
because of population-driven growth in the
housing stock and overall inflation.

0

25
'00

'02

'04

Source: Federal Reserve Board

5

'06

'08

'12

'14

'16

Housing Starts and Inventories

May 2016

Since last summer, housing starts have
been about flat, as further increases in

Starts and Permits

Millions

2.0

single-family starts have about offset a
pullback in multifamily starts. Singlefamily starts (light blue line) rebounded in

1.5

April, and appear to be on a gradual

1.3

uptrend. Multifamily starts (black line)

1.0

surged in the first half of 2015 but have

0.8

since moderated.

Single-Family Starts

1.8

0.5

Single-Family Permits
Multifamily Starts
Multifamily Permits

0.3
0.0
'00

'02

'04

Source: U.S. Census Bureau

Builder confidence remained upbeat in

'10

'12

'14

'16

80

Homebuilders index has recorded readings

'08

Builder Confidence

Index

May. The National Association of

'06

70

above 50 (meaning a majority of builders

60

view the market positively) for the last

50

23 months. All three of the index’s

40

components—sales expectations over the

30

next six months, current sales, and buyer

20

traffic—are above their 2014 averages.

10
0

'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: National Association of Homebuilders

The inventory of homes for sale remains
Millions

of existing homes for sale (dark blue line)

Unsold Homes

Millions

well below historical averages. The stock

Thousands

4.5

was at 1.98 million units at the end of

3.5

which was the lowest level since December

Existing (left scale)

4.0

March, up from 1.76 million in December,

700

3.0

1999. The stock of new homes for sale
(light blue line) was at a 7½-year high of

500

Series average

2.5

246,000. At the current sales pace, there is

1.5

available for sale; for new homes, the
available inventory is equivalent to a
5.8-month supply.

400
300

Series average

2.0

4.5-month supply of existing homes

600

200

New (right scale)
100

1.0

0
'02

'04

'06

'08

'10

'12

Source: National Association of Realtors and U.S. Census Bureau

6

'14

'16

Underpinnings of Housing Demand

May 2016

Interest Rate of 30 Year Fixed-Rate Mortgages

Mortgage interest rates remain very low
by historical standards. The average
interest rate on new 30-year fixed-rate
conventional mortgages settled at a threeyear low of 3.57 percent in the week ending
May 12. The current rate is only 26 basis
points higher than the lowest rate recorded
in 2012.

Percent
9
8
7
6
5
4
3

'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: Freddie Mac

The National Association of Realtors

Home Affordability

Index

Housing Affordability Index suggests that

240

housing remains affordable for the typical

220

family. Affordability has diminished

200

considerably since 2013 as home prices have

180

risen, but has stabilized recently due to

160

relatively low mortgage rates. (Note that the

140

index assumes a 20 percent down payment;

120

interest rates would be higher and

100

Record Affordability
Index = 214.5

Historic Average
(data since 1971)

80

affordability would be lower for a family that

'00

made a smaller down payment).

'02

'04

'06

'08

'10

'12

'14

'16

'14

'16

Source: National Association of Realtors

Attitudes Towards Buying
Households remain positive about home
buying conditions. The University of
Michigan Consumer Survey’s “Good Time to
Buy” Index remained slightly higher than
the long-term average in mid-May. Low
interest rates continue to be the main factor
cited when respondents were asked why
home-buying conditions are good.

Index (Good minus Bad plus 100)
180
170

160
150
140
Long-Run Average
(data since 1986)

130
120
110

100
'00

'02

'04

'06

'08

Source: University of Michigan Consumer Survey

7

'10

'12

Underpinnings of Housing Demand
Senior loan officers at banks report
easing mortgage lending standards in
recent quarters. The last seven quarters
mark the first period of sustained easing

FRB Senior Loan Officer Opinion Survey
on Mortgage Lending

100

Net Percent of Banks Reporting
Tightening Standards

80

since the period of dramatic tightening

60

during the financial crisis. (Note that the

May 2016

40

level of the line shown corresponds to the
change in lending standards, with values
below 0 representing an easing of lending

Tightening

20
0

standards and values above 0 representing a

-20

tightening).

-40

Easing

90

94

98

02

08

10

14

Mortgage Originations by Credit Score

Despite the easing, lending is still
restrained, and riskier borrowers continue
to have very limited access to mortgage
credit. Mortgage originations have risen, on
net, over the past year, but the pick-up has
been driven largely by borrowers with credit
scores above 780. Originations by
borrowers with credits scores below 780 are

Billions of dollars

with FICO scores below 660.

620-659

660-719

720-779

780+

800
600
400
200

well below pre-crisis levels. Almost no
mortgages are being extended to borrower

<620

1,000

0
'03

'04

'05

'06

'07

'08

'09

Source: FRBNY Consumer Credit Panel/Equifax
Note: Credit Score is Equifax Riskscore 3.0;

'10

'11

'12

'13

'14

'15

Credit Score at Mortgage Origination
800

The median FICO score of newly originated
mortgages has fallen slightly in recent

Score

750

quarters to around 750, but is still up

700

from roughly 700 in the early 2000s. At

median

650

the 10th percentile, the FICO score for new

25th percentile
10th percentile

mortgages was down to 642 by the end of

600

2015, compared with less than 600 in the

550

early 2000s.

500
'00

'02

'04

'06

'08

'10

'12

Source: FRBNY Consumer Credit Panel/Equifax
Note: Credit Score is Equifax Riskscore 3.0; mortgages include first-liens only.

8

'14

Household Formation
Household formation fell sharply over
the last two quarters. In the year ending
in March, just 538,000 households were
formed. The explanation for the decline

May 2016
Household Formation

Millions
3.0
2.5

over the past six months is unclear.
Between mid-2006 and 2014Q3, the rate of

1.5

household formation averaged roughly half

Historic Average
(data since 1956)

2.0

1.0

its historical average of 1.2 million per year.
Household formation surged at the end of
2014 and remained above its historical
average through 2015Q3.

0.5
0.0
-0.5
'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: U.S. Census Bureau, Treasury calculation

The proportion of young adults who are

Employment-to-Population Ratio
Ages 25-34

Percent

working has seen a partial recovery. The

84

employment-to-population ratio for

82

individuals ages 25-34 has reversed more

80

than half of the decline that occurred during

78

the recession. The strengthening labor
market should support household formation
going forward.

76
74
72
70
'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: Bureau of Labor Statistics

Growth in Rents vs. Overall Inflation
Higher rents are an obstacle to young

Year-over-year percent change

7.5

adults establishing their own households.
The supply of rental housing appears to

5.0

CPI-U: Rent of
Primary Residence

have not risen as fast as demand and, as a
result, rents have been increasing rapidly.
They outpaced overall inflation by
2.6 percentage points over the year ending
in April.

2.5

0.0
CPI-U: All Items
-2.5
'00
Source: BLS

9

'02

'04

'06

'08

'10

'12

'14

'16

Homeownership
The homeownership rate slipped in
2016Q1. The homeownership rate was 63.6
percent in 2016Q1, down from 63.7 in the
previous quarter, and just marginally higher
than the four-decade low of 63.5 percent in
2015Q2. The homeownership rate may
stagnate in coming quarters as household
formation continues to recover because

May 2016
Homeownership Rate
Percent
70
68
66
64
62

newly formed households are more likely to
rent before purchasing a home.

60
'80

'85

'90

'95

'00

'05

'10

'15

Source: U.S. Census Bureau

Percent

First-time home buyers account for
around half of purchase mortgage

Share of Mortgages Accounted by
First-time Buyers

55

53

originations. The share of newly originated
mortgages going to first-time buyers was

51

52.1 percent in March, higher than the 51.4
percent recorded a year ago.

49

47
'13

'14

'15

'16

Source: American Enterprise Institute

Primary Reasons for Renting among
Young Renters who Prefer to Own

87 percent of households headed by
young adults that are renting say that
they would prefer to own if they could
afford it. Of those households, the most

Cannot qualify
for a mortgage

35

commonly cited reasons for not owning are
lack of downpayment (59 percent) and not
being able to qualify for a mortgage to buy
a home (35 percent).

Cannot afford
downpayment

59

0

10

20

30
40
Percent

50

60

70

Source: Report on Economic Well-Being of U.S. Households in 2014, Federal Reserve Board

10

Home Sales
New single-family home sales remain on

May 2016
New-Single Family Home Sales

Thousands

a very gradual uptrend. At an annual rate

1600

of 511,000 in March, they were 1.6 percent

1400

higher than their average level in 2015.

1200

New single-family home sales averaged

1000

503,000 units for all of 2015, the best annual

800

performance since 2007. Still, the current

600

pace of sales is only about half the level

400

seen prior to the boom in the early 2000s.

200
0

'02

'04

'06

'08

'10

'12

'14

'16

Source: U.S. Census Bureau

Sales of existing single-family homes

Existing Single-Family Home Sales

Millions
7

have been moving sideways in recent
months at a level that is only a little
below that seen in the early 2000s.
Existing single-family home sales
rebounded in March following a sharp drop

6

5

4

in the previous month. Existing home sales
also showed sharp swings last fall because
of new mortgage disclosure regulations that
reportedly delayed contract signings by a

3

2

'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: National Association of Realtors

few days.

Pending Existing Home Sales
Index, 2002: Jan = 100

The National Association of Realtors

130

index of pending sales of existing homes

120

rose to a ten-month high in March. The
index is a leading indicator of existing
home sales, which are recorded at the

110
100

closing of the sale. The National

90

Association of Realtors is projecting that

80

existing home sales will rise 2.4 percent in

70

2016.

60
'02

'04

'06

'08

'10

'12

Source: National Association of Realtors, Treasury Calculation

11

'14

'16

Home Prices

May 2016
Changes in Home Prices

After rising at a high single-digit to
low-double-digit pace in late 2013 and
early 2014, the pace of home price

24

12-month percent change

16

appreciation has eased. Home prices are

8

now growing at a more sustainable mid-

0

single-digit pace.

20-City Case-Shiller

-8

FHFA Purchase-Only
CoreLogic

-16
-24

Zillow

'00

'02

'04

'06

'08

'10

'12

'14

'16

Source: Standard and Poors, FHFA, CoreLogic, Zillow

Home prices remain below their precrisis peaks. Most measures for the nation
as a whole are currently around early 2005
levels. The FHFA Purchase-Only Home Price
Index is the only one that has surpassed its
pre-recession peak. Forecasters generally

Home Prices
Index, January 2000 =100

220

20-City Case-Shiller
FHFA Purchase-Only
CoreLogic
Zillow

200
180
160

believe that home price appreciation will
remain moderate going forward.
Participants in the 2016Q1 Pulsenomics/
Zillow home price survey expect home
prices to rise 3.7 percent over the four

140
120
100

'00

'02

'04

quarters of 2016.

common way to assess whether home

'08

'10

'12

'14

'16

Price-to-Rent Ratio

Percent

The ratio of home prices to rents, a

'06

Source: Standard and Poors, FHFA, CoreLogic, Zillow

2.0
1.8

prices are overvalued, remains well

1.6

below its pre-crisis peak. That said, the

1.4

substantial appreciation of home prices
since late 2012 has pushed up this ratio,
and it is now above its pre-crisis range.

1.2
1.0
0.8
'84

'88

'92

'96

'00

'04

'08

'12

Source: Ratio of CoreLogic National Home Price Index to CPI Owner's Equivalent
Rent. Both Indexes set to 100 in January 1983.

12

'16

Mortgage Originations

May 2016
Mortgage Applications

Applications for home purchase

Index, 2000:Jan 7 = 100

mortgages have been trending upward

3000

over the past year. Even so, purchase

210

Purchase (right scale)

180

2500

applications remain well below pre-crisis
levels. Refinancing activity has been very
low since mid-2013 as most borrowers who

150

2000
1500

Refinance (left scale)

have been able to refinance have already

120
90

1000

done so.

60

500

30

0

0
'00

'04

'08

'12

'16

Source: Mortgage Bankers Association

New Originated Installment Loan Balances

New mortgage originations have
increased over the past year but
remain low by pre-crisis standards.
New mortgage originations rose to
$437 billion in 2015Q4, up from a low of
$354 billion in 2014Q4. The low level of
mortgage originations stands in contrast

Billions

Billions

250

900

Auto Loan (Left Axis)
200

700
Mortgage (Right Axis)

150

household credit, including auto loan
originations, which have been increasing

600
500

400

100

to the pattern of some other forms of

800

300

200

50

100
0

0

briskly along with sales and now stand

'04

near the top of their historical range.

Source: Federal Reserve Bank of New York

since its 2009 high, but remains higher
than boom levels. About 70 percent of new
mortgages were backed by the FHA, VA, or
GSEs in 2015 (dark blue and light blue
portions of bars). While bank portfolio
lending has increased noticeably, the
private-label mortgage-backed securities

'08

'10

'12

'14

Mortgage Originations by Investor

The share of new mortgage originations
backed by the government has fallen

'06

GSE securitization

FHA/VA securitization

PLS securitization

Portfolio

Share, percent

100%
80%
60%
40%

20%

market has experienced essentially no

0%

recovery since collapsing in late 2007.

Source: Inside Mortgage Finance and Urban Institute

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

13

Delinquencies, Foreclosures and Distressed Sales
Mortgage foreclosure and delinquency
rates continue to normalize. The share of
homes in foreclosure declined to 1.6 percent
of outstanding loans in 2016Q1. The rate of

Foreclosure and Delinquency Rates
Percent

12

Percent of loans 90 days or
more delinquent or in
foreclosure

10

mortgages in default (90+ days delinquent

8

or in foreclosure) fell to 3.3 percent in

6

2016Q1, compared with a pre-crisis average
of around 2 percent.

May 2016

Percent of loans in
foreclosure

4
Percent of loans 90 or
more days delinquent

2
0

'00

'02

'04

'06

'08

'10

'12

'14

Source: Mortgage Bankers Association and Haver Analytics

Re-Default Rate 24 Months after Modification

Re-default rates for borrowers who have
received a mortgage modification have

80

Percent

Fannie Mae
Government-Guaranteed
Portfolio Loans

run significantly lower for mortgages that
were modified more recently. Mortgages

Freddie Mac
Private
Overall

60

that were modified in 2013 (24 months ago)
had re-default rates that were between 32

40

and 55 percentage points lower than those
modified in 2008.

20

0
'08

'09

'10

Source: OCC Mortgage Metrics Report for Q1-2015

'11

'12

'13

Distressed Sales as a Percent of Total Sales

The share of sales represented by REO

Percent
35

sales has trended down over the past 3

REO Sales Share

30

years. In February 2016, REO sales stayed

Short Sales Share

25

around 8 percent of total sales. The share
associated with short sales remained

20

relatively constant at around 3 percent in

15

recent months.

10
5
0
'06

'07

Source: CoreLogic

14

'08

'09

'10

'11

'12

'13

'14

'15

'16

Negative Equity
Rising home prices have greatly reduced
the number of underwater borrowers.
The share of mortgage loans with negative
equity was 8.6 percent in 2015Q4, down
from 10.3 percent in 2015Q1. The number of
homes now underwater stands at
4.3 million, a 64 percent drop since the 2011
peak. Mortgages that are very underwater,
with negative equity exceeding 25 percent,
have declined and are now 37 percent of all
underwater mortgages.

May 2016
Share of Loans that are Underwater by
Loan-to-Value Ratio

Percent
30

100-105

25

105-125

125+

20
15
10
5

0
'10

'11

'12

'13

'14

'15

Source: CoreLogic Equity Report, 2015 Q4

Amount of Negative Equity
Billions of dollars
800

The aggregate amount of negative
equity has fallen significantly. Since

600

2010Q1, aggregate negative equity has
fallen from more than $800 billion to

400

around $300 billion in 2015Q4.
200

0

'10

'11

'12

'13

'14

'15

Negative Equity Share in Top 5 States
Negative equity rates are still very high
in some states. Around 20 percent of
mortgaged residential properties in Nevada

20.0

18.7

18.0

17.1

16.0

14.6

14.0

and Florida still have negative equity.

13.5

12.0

However, these rates have fallen by more

14.0

10.0

than half in these two states since the

8.0

beginning of 2013.

6.0

4.0
2.0
0.0
NV

15

FL

IL

AZ

RI

State Detail
Serious delinquencies have fallen across
the country but the degree of
improvement varies by state. They remain
near peak levels in some states, particularly
in judicial foreclosure states such as New
Jersey and New York. However, serious

May 2016

Serious Delinquencies for 25 Highest-Rate States:
Q1 2016
Percent, since Q1 2000
25.00
Q1 2016 value

Minimum since Q1 2000

Maximum since Q1 2000

20.00
15.00

delinquencies are down more than 75
state that passed a law in June 2013
speeding up the foreclosure process.
Serious delinquencies have also fallen
markedly in hard-hit areas with flexible

10.00
5.00
0.00

NJ
NY
ME
FL
DE
RI
CT
MS
DC
MD
NV
HI
PA
NM
OH
IL
MA
LA
IN
OK
KY
VT
AL
SC
AR

percent from their peak in Florida, a judicial

Source: Mortgage Bankers Association/Haver

foreclosure laws, such as Nevada.

Foreclosure Inventory by State
Foreclosure inventories have declined in

AK

many states but remain relatively high in

VT

others. Judicial foreclosure is an important

WA MT ND MN WI

factor: 15 of 25 states that employ the

ID WY SD

practice have noticeably elevated rates (two

OR NV CO

darkest shades). Other states with high

CA

inventories, like Nevada, are still struggling

IL

IN

NY MA

OH PA

OK

AR

TN NC

LA MS AL

FL

HI
Source: CoreLogic Market Pulse, data as of February 2016

16

0.5

0.9

SC

GA

TX

0.3

NJ

NE MO KY WV VA MD DC

UT NM KS
AZ

economically.

IA

MI

NH ME

1.3

2.2

4%

DE

CT

RI


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102