When it comes to the economy, good news is always accompanied by an adverse account of some sort. On the positive side, reports indicate that the latest foreclosure rate in the U.S. has hit a new milestone.
According to RealtyTrac, a foreclosure sales and analytics company, 107,194 U.S. properties filed for foreclosure in June, the lowest since the housing price bubble burst in July 2006.
"Over the next six to nine months, nationwide, foreclosure numbers should start to flatten,” noted RealtyTrac's Daren Blomquist.
There continues to be a wide discrepancy between states, however. Nine states saw foreclosure activity rise in the first half of 2014 compared with a year ago, including judicial states such as New Jersey (up 54 percent), Maryland (up 18 percent), Massachusetts (up 4 percent) and Connecticut (up 4 percent). Florida, also a judicial foreclosure state, had the highest rate, with one in 74 housing units receiving some kind of foreclosure filing.
Although foreclosures are no longer a widespread contagion threatening to derail the housing market's return to full health, the market is not out of the woods yet. There are still between 1.5 million and 2 million seriously delinquent loans, most of which were issued before 2009 and will end up in foreclosure. Rather than all of these properties going back to the banks, however, many may now be sold at foreclosure auctions.
This lack of foreclosures coming up for sale is creating chaos with pricing and demand in some local markets. Cities that saw the worst of the crisis and were then swamped with investors are now coping with the exodus of those same investors, who left regular potential buyers with higher home prices and harsh inventory shortages.
Home sales in markets such as Phoenix and Las Vegas are falling as prices continue to rise. In Southern California which saw some of the first foreclosures from the housing bust, June sales were the slowest in three years with purchases in Southern California falling to their lowest level since the end of 2010. The median sale price rose to its highest level in 77 months, albeit posting the smallest annual gain in two years.
Housing Starts
On the negative side, a report on Thursday showed a tumble in housing starts and building permits last month. While the broader economy has rebounded from the first-quarter slump, housing is struggling to get back on track since stalling in late 2013 in the wake of a rise in mortgage rates.
"This part of economy is going in the wrong direction while the rest of the economy is picking up," said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.
Groundbreaking for single-family homes, the largest part of the market, tumbled 9.0 percent in June to a 575,000-unit pace, the lowest since November 2012. Single-family starts in the South hit a two-year low. Starts for the volatile multi-family homes segment dropped 9.9 percent to a 318,000-unit rate.
In a separate report, the Commerce Department indicated that groundbreaking declined 9.3 percent to a seasonally adjusted annual 893,000 million unit-pace, the lowest since September, 2013. That was the second straight month of declines and confounded economists' expectations for a rise to a 1.02 million-unit rate.
But there are glimmers of hope for the sector. A survey on Wednesday showed that confidence among single-family home builders reached a six-month high in July, amid optimism over sales over the next six months.