Despite a number of improving indicators throughout the housing market, experts are uncertain about what the future has in store for the real estate industry.
As the housing market enters its peak season for activity, the sales rate of existing properties, including single-family homes, townhouses condominiums and co-ops, rose 2.4 percent in April on an annual basis, according to the most recent Housing Scorecard from the White House.
Overall inventory thins
At the same time, the inventory of new builds grew for the first time since April 2007. However, the sales rate of both existing and new homes outpaced the supply, causing the overall stock of properties on the market to decline to a 5.1-month inventory.
Government initiatives, such as the Home Affordable Refinance Program and Home Affordable Modification Program, also continued to be successful, according to the report.
"This month's indicators show promise - more than 180,000 borrowers took advantage of our enhanced Home Affordable Refinance Program in the last quarter alone and foreclosure starts are declining as more homeowners secure mortgage relief - but with so many households still struggling to make ends meet it's clear that we have more work ahead," said Department of Housing and Urban Development acting assistant director Erika Poethig.
Call for more action
In order to provide even more financial safety and soundness for distressed borrowers, Poethig highlighted the importance of Congress passing President Barack Obama's refinancing proposal. This measure could allocate even more funds to help a greater number these underwater homeowners.
This initiative is especially important since mortgage records indicate that the subprime delinquency rate increased to 28.9 percent in April from 28.6 percent the previous month. Despite this slight increase, the rate was still below where it was a year earlier. Meanwhile, the delinquency rate of loans backed by the Federal Housing Administration also increased, rising to 11.6 percent from 11.44 percent.
Additionally, the number of borrowers saddled with negative equity also increased. At the end of April there were an estimated 11,119,000 underwater homeowners across the country. This is a significant increase from a year earlier, when only 10,723,000 were underwater.
As a potential result of the increase in delinquent borrowers and households with negative equity, the mortgage default rate could increase in the coming months if borrowers don't take measures to restructure their loans into more favorable terms.