The CoreLogic Home Price index has reported quickening appreciation in home values since May, and in September annual price growth was more than two percentage points faster than one year earlier. The acceleration in price growth reflected a demand and supply imbalance.
In August 2020, 6.6% of home mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure)\[1\], unchanged from July 2020, but a 2.9-percentage point increase from August 2019, according to the latest CoreLogic Loan Performance Insights Report.
Recent loan performance data from CoreLogic shows that the nation’s overall mortgage delinquency rate – the proportion of mortgage loans falling 30 or more days behind scheduled payment, including loans in foreclosure – have risen quickly during the COVID-19 pandemic, as millions of Americans lost their jobs and income due to the economic shutdown.
Unlike the Great Recession, the speedy intervention provided by the CARES Act ensured mortgage forbearance options for homeowners who were financially harmed by the pandemic recession and had a federally backed loan. And while forbearance options will help some homeowners keep their homes, the path of employment rebound – which is still unclear - will be a critical determinant for many delinquency outcomes.
The COVID-19 pandemic has had a big effect on the mortgage market. Along with a drop in mortgage rates to a record low, the jumbo-conforming mortgage rate spread has also been affected. Before 2013 mortgage rates for jumbo loans were higher than for conforming loans. However, in 2013 the rate-difference fell, and jumbo rates have averaged 5 basis points lower than conforming during 2013-2019.
National home prices increased 6.7% year over year in September 2020, according to the latest CoreLogic Home Price Index (HPI®) Report. The September 2020 HPI gain was up from the September 2019 gain of 3.5% and was the highest year-over-year gain since May 2014.
The forgone spring home-buying season appears to have fully shifted into summer months, leading to sales volumes that are picking up speed at a time when they would normally show signs of slowing. Not only was demand in August fueled by buyers planning on purchasing a home in the spring, but also by those motivated by record-low mortgage rates, desire for a larger home or desire for a vacation home as a result of the pandemic.
Loan application volume, mortgage rates, and lenders underwriting standards have been impacted by the COVID-19 pandemic. For example, the mortgage interest rate is at a record low and purchase loan application trend highlights strong demand for home buying. Lenders may have changed their underwriting standards in response to these trends and economic uncertainty.
U.S. single-family rent growth strengthened in August, increasing 2.1% year over year, a bit higher than the 1.7% rate reported for July 2020, but a slowdown from the 2.9% rate recorded for August 2019, according to the CoreLogic Single-Family Rent Index (SFRI). The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time.
The World Health Organization declared COVID-19 a global pandemic on March 11. By mid-March, shelter-in-place orders were issued across many nations. While each of us may think about how it has affected our own local neighborhood, it has also affected communities across the world.
Since the Great Recession of 2008, the real estate market has rebounded nicely to say the least. In fact, as home prices continue to climb, it has become increasingly difficult for the average American to afford to purchase a home. Simply put, home prices are increasing at a faster rate than income.
While seemingly defying the odds, home price growth has persisted throughout the pandemic and showed little sign of slowing down even though the nation is facing a potentially bigger contraction than the Great Recession. According to the latest CoreLogic HPI, home prices have grown about 70% from their post-Great Recession nadir in 2011.
National home prices increased 5.9% year over year in August 2020, according to the latest Home Price Index (HPI®) Report. The August 2020 HPI gain was up from the August 2019 gain of 3.5% and was the highest year-over-year gain since June 2018. Meanwhile, for-sale inventory has continued to dwindle, dropping 17% year over year in August, which created upward pressure on home price appreciation as buyers compete for the limited supply of homes.
The latest CoreLogic® Home Price Index (HPI) for the U.S. recorded an acceleration in annual price growth to 5.5% for July, about two percentage points faster than the prior July – despite much higher unemployment. The gain reflected rising demand and a supply shortage; Record low mortgage rates fueled homebuyer activity, especially for first-time buyers, and the health risks engendered by the pandemic persuaded many older home sellers to delay their listing to a later, healthier time.
In the wake of the COVID-19 pandemic, purchase-loan appraisals took a blow from disruptions inflicted upon homebuying and selling activities under nationwide lock-down and social distancing restrictions. After all, there is less demand for appraisal services by lenders when home sales are down. Now, with much of the country re-opening, the good news is that home sales have rebounded quickly.
The amount of equity in mortgaged real estate increased by $620 billion in the second quarter of 2020 from the second quarter of 2019, an annual increase of 6.6%, according to the latest CoreLogic Equity Report. Borrower equity hit a new high in the second quarter of 2020, and borrowers have gained over $6 trillion in equity in the last 10 years.
The widening pandemic led President Trump to declare a national emergency on March 13, sparking shelter-in-place directives across many communities. The shuttering of commercial establishments subsequently put many American workers out of work. As such, many homeowners affected by sudden job loss were ill prepared to maintain payments on their home mortgage loans.
U.S. Single-Family Rents Up 1.7% Year Over Year in July. Rent increases slowed across all price levels, though rents for lower-priced homes increased faster than those of higher-priced homes in July compared with a year earlier. Honolulu saw the largest decrease in rent prices, falling 1.3% from a year earlier.
The nation’s overall delinquency rate was 7.1% in June. All states logged annual increases in both overall and serious delinquency rates in June. In June 2020, 7.1% of home mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure), slightly lower than the May 2020 rate of 7.3%, but a 3.1-percentage point increase from June 2019.
With COVID-19 disrupting businesses throughout the nation, there is reasonable concern regarding the impact of the pandemic on construction trends. Every quarter, CoreLogic publishes the Quarterly Construction Insights report, which digs into critical pieces of the construction economy in the U.S. and Canada, such as changes in material and labor costs, permits for new construction, and construction employment. Here are some of our key findings for Q2 2020.
