With that 2012 could be the year when the housing market begins to recover, fresh data offers more reason for cautious optimism.
U.S. loan delinquency rates -- which include loans 30 or more days past due, but not in foreclosure -- fell in December on a year-over-year basis, down 7.7 percent from 2010, according to a new report from mortgage analytics firm Lender Processing Services (LPS). That rate is unchanged from November of 2011, but still represents a significant drop from the previous year.
The news isn't all good. More than 4 million loans are 30 or more days past due, and nearly 1.8 million are 90 or more days delinquent, the LPS figures show. Including the number of homes currently in foreclosure, there are now 6.1 million such delinquencies. Of course, it is no surprise that so many homeowners are behind on their mortgage, given the huge spike in foreclosures following the collapse of the housing bubble.
Still, the slowing rate of delinquencies indicates that more people were able to keep up with their mortgage payments in 2011 than during the previous year. If that trend continues, a possibility given the recent decrease in unemployment, housing could begin to rebound.
Need more convincing? In another positive sign for the sector, housing starts in December rose 24.9 percent year-over-year, despite a 4.1 percent dip from November to December of 2011. Said analysts at Capital Economics:
The fall in housing starts in December was driven by a steep decline in the often volatile multifamily sector, while starts of single-family homes actually rose slightly.
December's fall in housing starts follows a 9.3 percent gain in November, which means the drop reversed only half -- not all -- of the rise in the previous month. Capital Economics believes that with home demand set to improve this year, home construction is now "past the low-water mark and will rise modestly" in 2012.
And if mortgage rates remain low, there may be buyers for those new homes. According to Freddie Mac's Primary Mortgage Market Survey, released Thursday, mortgage rates hit a new all-time low this week. Interest on a 30-year fixed-rate mortgage (FRM) edged down, falling to 3.88 percent. Last year at this time, a 30-year FRM averaged 4.74 percent. The rate on a 15-year FRM was essentially flat, rising to 3.17 percent from last week's 3.16. That's still better than last year at this time, when rates for a 15-year FRM averaged 4.05 percent.
Despite the large number of delinquent loans and a fall in housing starts from November to December, 2012 looks like it could be a stronger year for the housing market. Low mortgage rates and falling unemployment numbers, combined with heightened consumer confidence, could mean more buyers -- just the thing we need to begin a housing turnaround.