The Evolution of PD&R National Housing Market Releases
Carolyn Lynch, PD&R: 2004 to present
The first Housing Market Indicators report, which was based on data available in January 2017, was released to the public in early February 2017, and continues to provide essential information to consumers and policymakers. Photo credit: iStock.com/Davel5957
The Housing Market Indicators (HMI) report, a monthly public release providing information on national housing market conditions, presents key statistics on home sales and prices, housing supply, mortgage originations and finance costs, and homeownership and rental affordability as well as data on other timely housing topics. As part of the PD&R@50 series, this article describes how the content and use of the Housing Market Indicators report have evolved over time in response to changes in the housing market.
The HMI report originated in 2007 as an Office of Policy Development and Research (PD&R) Fact Sheet on national housing market conditions produced for internal circulation to senior HUD officials. The Fact Sheet was relied on primarily as a summary of the national housing market and an information source for correspondence and public inquiries. The Fact Sheet reported monthly data on home sales and prices, the inventory of homes for sale, housing starts, mortgage rates, and homeownership affordability; quarterly data on the homeownership rate, homeowners’ equity, mortgage originations and delinquencies, and foreclosures; as well as data on key macroeconomic variables such as the unemployment rate, the consumer price index, and the gross domestic product.
Under HUD Secretary Shaun Donovan, the PD&R Fact Sheet was revised to become a more comprehensive report on the nation’s housing. The redesigned Fact Sheet not only informed the public of changing conditions in the national housing market because of the national foreclosure crisis (2007-2010), but also helped the public monitor the Obama administration’s multifaceted efforts to stabilize the housing market and aid its recovery. Edward Szymanowski, who was then the associate deputy assistant secretary of PD&R’s Office of Economic Affairs, worked closely with the Secretary’s Office to develop this new release. Named the Housing Scorecard, the monthly release was first issued jointly by HUD and the U.S. Treasury Department in June 2010. The Obama administration’s stabilization and recovery efforts, launched in April 2009, included assistance to homeowners through the Federal Housing Administration’s (FHA’s) programs, the Home Affordable Modification Program (HAMP), and the Home Affordable Refinance Program (HARP); assistance to communities through the Neighborhood Stabilization Program (NSP); and assistance to states through the Hardest Hit Fund grants, among other programs.
The Housing Scorecard measured progress on the housing market’s recovery by reporting data from these programs in addition to data on the customary housing market indicators. The release included mortgage modification data from three major initiatives: the FHA Loss Mitigation and Early Delinquency Intervention program administered by HUD; HAMP, a mortgage modification program administered by the U.S. Treasury Department; and Hope Now, a proprietary mortgage modification program administered by a coalition of private-sector lenders. Information on refinancing programs, which reduced a mortgage’s interest and/or principal, included data from the U.S. Treasury Department’s HARP program and FHA’s Streamline Refinance program. HUD’s Neighborhood Stabilization Program was designed to restore neighborhoods that were hardest hit by a concentration of foreclosures. The Housing Scorecard included data on the demolition or clearance of housing, new construction or rehabilitation of housing units, and direct homeownership assistance under NSP. HUD also provided enhanced opportunities for housing counseling that were recorded in the Housing Scorecard. The U.S. Treasury’s Hardest Hit Fund awarded grants to states where the crisis was especially severe, and the report included the dollar amounts of these grants.
The cover of the last Housing Scorecard, released to the public on January 10, 2017.
The Housing Scorecard also added to or enhanced the housing market condition indicators reported in the PD&R Fact Sheet by including monthly data on newly initiated and completed foreclosures, the number of underwater borrowers, a CoreLogic Price Index (excluding distressed sales), short sales, real estate owned sales, distressed home sales as a percentage of all home sales, and more current data on prime and subprime delinquency rates and serious delinquency. Twelve detailed graphs depicting long-term trends for many housing market indicators and stabilization and recovery programs were added to visualize ongoing progress in restoring the housing market.
To highlight the considerable geographic variation in the nation’s housing market conditions and reflect the regional differences in how the foreclosure crisis was experienced across the nation, HUD developed a regional scorecard spotlight as a bimonthly addendum to the Housing Scorecard to provide contextual depth. HUD’s Economic and Market Analysis Division and Field Offices contributed to these regional reports. Metropolitan areas faced different circumstances before the housing crisis hit, and each applied different strategies and responses to their foreclosure problems. The industrial Midwest, along with several central and southern Plains states, had high foreclosure rates as early as 2004 that were exacerbated by economic distress, whereas the “sand states” of Arizona, California, Florida, and Nevada, along with several upper Plains states, had strong economies and foreclosure rates well below the national average. Home prices in the sand states increased rapidly through the end of 2005, whereas the industrial Midwest states missed the upside of the housing bubble and had the lowest rates of housing price appreciation before 2006. Nevertheless, these Midwestern states experienced subsequent plunging home prices, that declined at rates that nearly matched those in the sand states.
The Phoenix MSA, for example, was not only one of the nation’s hardest-hit areas, but it was also a typical example of how the crisis unfolded in the four sand states. The first scorecard spotlight, released with the May 2011 edition of the national scorecard, featured the Phoenix-Glendale MSA. Going into the crisis, Phoenix experienced rapid population growth, high levels of new home construction, high levels of subprime loans to finance home purchases, and rapidly rising home prices. After the housing bubble burst, the foreclosure rate rose, and home prices fell dramatically. Many new home subdivisions were left only partially complete as builders lost their financing or went bankrupt, and the influx of new residents abruptly halted.
In contrast, the foreclosure crisis in the Cleveland MSA and other parts of the industrial Midwest developed much earlier than in other areas of the nation. As early as 2003, the share of distressed mortgages in the Cleveland MSA was higher than the national average and rising. Although Cleveland area home prices did not appreciate rapidly during the housing bubble, local home prices following the bubble fell by nearly as great a percentage as did those for the rest of the nation. By the start of the national mortgage crisis in 2007, Cleveland had already experienced several years of above-average unemployment, net job losses, and population declines. Researchers found that as the national housing crisis began, high-cost or subprime loans in Cleveland were defaulting at eight times the rate of other local mortgages. The Housing Scorecards and regional spotlights describing these metropolitan differences can be found at www.hud.gov/initiatives/Housing_Scorecard and HUD Archives: Housing Scorecard.
After the Great Recession, interest in rental affordability grew as rising rents outpaced income growth and eroded the affordability of leasing a home. I designed a Rental Affordability Index (RAI) that is similar to the National Association of Realtors’ Housing Affordability Index (which focuses on homeownership) to show how U.S. trends in rental affordability compare with homeownership affordability over time. HUD added the RAI and a graph comparing long-term U.S. trends in homeownership affordability to rental affordability to the Scorecard in September 2016. The graph helped visualize the significant gap that existed at the time between the ability to lease a home and the ability to purchase a home. As rising rents outpaced income growth, the affordability of renting a home began to decline during mid-2001, reached a low point at the end of 2010, and then began to improve modestly. In contrast, as mortgage rates and home prices began to decline after the housing bubble burst, the affordability of purchasing a home rose from a low point in mid-2006 to a peak in the beginning of 2012 and then began to trend downward.
The last Housing Scorecard was released to the public on January 10, 2017. With the change in administration, HUD stopped reporting on the impact of Obama administration programs and changed the name of the release to the Housing Market Indicators (HMI) report.
The new report captured the impact of the COVID-19 pandemic on housing insecurity. Many households faced hardships during the pandemic and were unable to meet their mortgage or rental payments. The Coronavirus Aid, Relief, and Economic Security Act instituted a national moratorium on evictions and foreclosures and was extended several times, ending September 30, 2021. Households were also able to apply for forbearance on a mortgage or a loan modification. The American Rescue Plan provided direct payments to households that were struggling to meet their mortgage and rental payments, and HUD’s HOME program provided grants to states to fight homelessness. The Mortgage Bankers Association (MBA) started the MBA Weekly Forbearance and Call Volume Survey, and data on the share and number of homeowners with mortgages in forbearance were added to the HMI report in April 2020. The U.S. Census Bureau initiated the Household Pulse Survey, which, among other variables, collected data on the number of renter and homeowner households that were behind on their housing payments as well as the number of households who were fearful of imminent eviction or foreclosure. The number and shares of these renter and homeowner households were added to the HMI report in August 2021, and graphs showing trends in those data were included in the report beginning in September 2021. We also included data on the number of renters who applied for and received assistance under the U.S. Treasury Department’s Emergency Rental Assistance program.
Guidance was also provided for interpreting Current Population Survey/Housing Vacancy Survey data collected during the pandemic. In the last three quarters of 2020 and the first two quarters of 2021, the U.S. Census Bureau restricted the number of in-person interviews, which resulted in biased survey estimates. The Census Bureau suspended in-person interviews on March 20, 2020, and conducted the second quarter survey solely by telephone interviews; in-person interviews were incrementally added back in the subsequent four quarters. These changes in survey methods affected the estimates of housing indicators such as homeownership, vacancy rates, housing stock, household growth, and rental affordability. The suspension of all in-person interviews in the second quarter of 2020 led to a sharp initial change in the indicator. For example, the national homeownership rate jumped to 67.9 percent in the second quarter of 2020 from 65.3 percent in the first quarter of 2020. As in-person interviews were incrementally added back to the survey, homeownership rate estimates trended down and were at the respective rates of 67.4 percent, 65.8 percent, 65.6 percent, and 65.4 percent from the third quarter of 2020 to the second quarter of 2021. When normal data collection procedures resumed in the third quarter of 2021, the national homeownership rate was 65.4 percent, the same as it was in the previous quarter, when data collection was only minimally restricted.
The Housing Market Indicators Reports can be found at www.huduser.gov/portal/ushmc/hmi-update.html. For more than a decade, these reports have provided essential information to consumers and policymakers. The reports have evolved over time to keep pace with housing market changes, and HUD will undoubtedly add new indicators in the future to describe and analyze important changes in the housing market.