Mortgage delinquency and foreclosure rates are still near historic lows, but affordability remains a challenge for prospective U.S. homebuyers
Mortgage rates remain elevated and continue to govern the housing market. While a low supply of homes for sale has shown signs of improvement in recent months, limited inventory is a factor keeping home prices up in 2024. On the flip side, the strong labor market helps most borrowers remain current on their mortgages. Here’s where the current landscape stands:
1. Mortgage performance remains strong. The U.S. overall mortgage delinquency rate remained near a historically low 2.6% in April according to CoreLogic , down slightly from one year earlier. Further, the serious delinquency rate for all outstanding mortgages was at an all-time low of 0.9% and the foreclosure rate held steady at 0.3% (where it has been since early 2023), indicating that borrowers in later stages of delinquency are finding alternatives to foreclosure. While overall delinquency rates are low, these rates for Federal Housing Administration (FHA) loans remain higher than other mortgage types.
2. Serious delinquency rates for adjustable-rate mortgages (ARMs) and fixed-rate mortgages (FRMs) were 2.6% and 0.6%, respectively, in March 2024. The serious delinquency rate dropped significantly for both FRMs and ARMs in March 2024 compared with previous years, and the rate for ARMs is at a 19-year low. ARMs have historically had higher delinquency rates than FRMs. However, today’s serious delinquency rates for both ARMs and FRMs are heavily influenced by older loans. The bulk of the loans for both ARMs and FRMs that are seriously delinquent originated between 2003 and 2008. (Figure 1).
3. The rising debt-to-income (DTI) ratio of current homebuyers suggests that housing affordability remains at an all-time low. In March 2024, the median monthly debt burden reached 46% for homebuyers that used FHA loans to finance home purchases, up by 1.5 percentage points from before the pandemic. The average debt reached 38.9% among homebuyers using Government Sponsored Enterprise (GSE) loans in the financing of home purchases, up by 2.1 percentage points from before the pandemic.
4. More buyers are relying on FHA loans for new home purchases. The share of mortgaged new home purchases made with FHA loans is up to 26% so far in 2024, a 10% increase from 2022. Higher prices have made buyers more reliant on FHA loans because they can no longer afford down payments.
5. Investors have made 28% of all single-family home purchases in 2024 so far, maintaining their high market share since the onset of the pandemic. High prices and interest rates have spurred strong demand for single-family rentals from households that would otherwise be potential homebuyers, and while those market conditions remain, the investor share should stay high.
6. The share of home purchases without a mortgage remained elevated in May at 37%, up slightly from a year earlier. The all-cash buyer share has risen over the past few years, up from 32% in May 2019. Elevated cash shares are driven by high investor activity and by owners cashing in home equity and using the proceeds to purchase an additional property.
7. Weekly pending home sales reported in the multiple listing service (MLS) have been slow to rebound in 2024. After starting off slow, pending sales picked up pace in late February and are trending 2% above 2023 over the last month. Closed MLS home sales are down by 9% for May compared with 2023. High mortgage rates impacting affordability and lack of inventory in many markets continue to weigh on home sales activity.
8. The monthly active inventory of existing homes for sales listed in the MLS has also been on a steady upward trend since the beginning of the year. Active inventory was 10% above 2023 levels in May but remains well-below 2019 levels – down by 30%.
9. Low inventory and still-high demand is keeping home prices up. Annual U.S. home price appreciation was 5.3% in April according to CoreLogic’s latest Home Price Insights report, though there were pockets of weakness as mortgage rates surged again in April – with metros in Texas and Florida posting month-over-month decreases in home prices. Annual gains in home prices continued to cluster in markets in the Northeast and West, where prices were up by double digits compared with last April.
10. Despite strong home price increases over the past year, some markets have yet to return to 2022 peaks. About 12% of metropolitan areas remain below the June 2022 high, with most of them located in Texas, Idaho and the Northwest. There tend to be markets where home price gains were particularly strong during the pandemic and have seen significant resetting as mortgage rates surged, as shown in Figure 2.
To stay current with the latest housing market conditions and trends, visit CoreLogic’s Office of the Chief Economist home page.
