This week’s Real Estate stories

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By MarketWatch

Don’t miss these top stories:

  • Shadow inventory rose in August

  • Existing home sales slip in October

  • Walking away from a mortgage

  • Mortgage rates stabilize after a spike

  • October new-home sales drop 8.1%

In October, there was 10.5 months’ worth of existing-homes inventory on the market, the National Association of Realtors reported this week.

But that’s just the inventory we can easily see in the statistics.

Consider all the seriously delinquent mortgages out there on homes that will end up in foreclosure. Or homes that have been through foreclosure and are now owned — but not listed — by a bank.

There were eight months of this “shadow supply” in August, according to CoreLogic, a provider of consumer, financial and property information. Add that to CoreLogic’s estimate of the visible supply of homes and you get 23 months of inventory on the market in August — more than three times what’s considered normal.

All that inventory helps make it cheaper for people to buy a home, but other factors are holding those sales back, said Mike Larson, real-estate and interest-rate analyst at Weiss Research, in an email.

“Houses are cheap again after a long period of drastic overvaluation, and mortgage rates remain relatively low,” Larson said.

“But if you’re not a plain-vanilla borrower who can qualify for Fannie Mae, Freddie Mac, or FHA financing, you’re having a tough time finding a mortgage lender willing to do business with you. The elevated unemployment rate and uncertainty about the future direction of home prices are also working against the recovery,” he said.

Read more real-estate news in this week’s pages, including the latest on mortgage rates and a Realty QA about a homeowner thinking of strategically defaulting on a mortgage.

Larson’s take: Housing sales, pricing and construction activity should stay relatively stable for a while. “That’s not as bad as the free-fall we were seeing a couple years ago, but it certainly isn’t a robust recovery, either,” he said.

—Amy Hoak, Real Estate writer

Housing’s ‘shadow inventory’ rose in August

The pending supply or “shadow inventory” of U.S. homes hit 2.1 million units, or eight months of supply, in August, up more than 10% from 1.9 million units, or five months of supply, a year ago, according to a report by CoreLogic on Monday.

Read more: Shadow inventory rose in August.

Walking away from a mortgage

Readers ask about the pros and cons of walking away from a mortgage, and Lew Sichelman explains why strategic default is only a last resort, in this week’s Realty QA.

Read more: Walking away from a mortgage.

Mortgage rates stabilize after last week’s spike

After a big jump last week, mortgage rates stabilized this week, with rates on fixed-rate mortgages barely changing, according to Freddie Mac’s weekly survey of conforming mortgage rates, released Wednesday.

Read more: Mortgage rates stabilize after last week’s spike.

October new-home sales down 8.1%, U.S. says

Sales of new single-family homes fell 8.1% in October to a seasonally adjusted annual rate of 283,000, according to data released Wednesday by the Census Bureau and the Department of Housing and Urban Development.

Read more: October new-home sales down 8.1%, U.S. says.

Existing-home sales slip 2.2% in October

Sales of existing homes fell 2.2% in October, according to a report released Tuesday, with activity remaining mired near record lows as worries over prices, a glut of foreclosed properties, restrictive credit and high unemployment combine to weigh on the market.

Read more: Existing home sales slip in October.


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