Delinquencies Down and Pending Home Sales Up

By Kyle Chezum Updated on 4/28/2011

 

Fannie Mae reported that mortgage delinquencies on residential single family homes have decreased this year significantly from last year's levels.  In addition, mortgage delinquency rates have declined each month from February 2010 until today, down from about 5.59% last year to 4.44% at present.

Cynics claim that this continued, sustained decrease can only mean one thing.  They claim that the decrease in delinquency illustrates the vast and unsettling effects of the foreclosure crisis.  As more and more families lose their homes, fewer are left to default on their loans.  As more and more homes are sent through the foreclosure process, fewer mortgage remain on delinquency lists.  As homeowners face successful foreclosures, the delinquency rate naturally decreases.

But this may not be the full story.  Studies show that delinquency rates on other forms of debt, including credit card debt, have decreased as well.  The same is true of personal loans.  Borrowers, it seems may be simply managing their money better.  It seems many borrowers are trying to regain solvency through any means necessary.

The fact that pending home sales increased in March shows that it isn't simply a lack of borrowers that is keeping delinquency rates down.  March brought 5.1% more pending home sales than February, though the number was 11% lower than last year's March levels.  Still, when taken in conjunction with decreasing delinquency, the news paints a picture of improving health in the real estate sector.