Nationwide’s Health of Housing Markets Report
Select a quarter and then press “Play” to initiate the interactive map. To get the performance ranking for a specific MSA, zoom in or scroll over the map or click on the numerical ranking legend for wider comparisons.
Next Release: March 9, 2021
2020Q4 HoHM Report: Forbearance for delinquent loans keeps the housing outlook positive
- The spike in mortgage delinquencies in the third quarter would normally have had a significantly negative impact on the national LIHHM*. Due to massive and timely forbearance policies, however, many of these delinquent loans have not slipped into foreclosure — nor are they likely to. As a result, we lowered the usual model delinquency factor to reflect current and expected policy, which left the national score little changed from last quarter at a slightly positive rating.
- Within the adjusted data, most of the MSA rankings remained neutral or slightly negative — reflective of the drag on the housing outlook from this year’s job losses and elevated unemployment rates. Also, most MSAs are flat or down compared with a year ago due to the extended impacts of the COVID-19 recession.
- In response to the extremely tight supply of homes for sale, home price appreciation has accelerated in many local markets. While mortgage rates remain near record lows, rapidly rising prices are a risk for housing affordability, especially if inventory levels remain very low as is expected.
Forbearance policies for homeowners forced a change in the data
Mortgage delinquencies in third quarter (which shot above the peaks from the Great Recession) had a significantly negative impact on the original data for the national LIHHM*, dropping it below 100 for the first time in 10 years. But delinquencies in the current environment should not be viewed as they have been in the past due to government policy changes. Forbearance on delinquent mortgages will allow many homeowners to postpone payments and reschedule debts with lenders, preventing many (perhaps most) of these delinquencies from turning into foreclosures. It is likely that forbearance policies will be extended further under the incoming Biden administration. Consequently, we adjusted the national and local market delinquency rates to assume that a much smaller share of delinquent loans will ultimately default. After this adjustment, the national LIHHM was little changed from the second quarter, remaining modestly positive.
Even after the delinquency adjustment, elevated unemployment and a large contraction in jobs continue to weigh on the housing sector outlook. House price gains are also accelerating rapidly in response to the persistent imbalance between supply and demand in the market. If these trends continue, higher housing costs will eventually offset the positive affordability benefits from low mortgage rates, potentially pricing out some homebuyers.
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