Daily Forecast Update: Jobless Claims, Delinquency Data

November 19, 2009

By Danielle Hale, Research Economist

Today's data on jobless claims is neutral. The weekly data on claims were stable and the less-volatile 4-week moving average showed some improvement. These are positive signs, but the high level of jobless claims still indicates weakness in the labor market.
Labor market weakness translates into mortgage difficulty for some homeowners. The Mortgage Bankers reported rising delinquencies and foreclosures in the third quarter, especially among FHA and Prime loan types. A weak labor market recovery will strain the housing market recovery.
The National Association of Realtors has pulled data from the Mortgage Bankers and other sources into concise, state-by-state reports on mortgage conditions. Read the commentary introducing the reports and then check out the report for your state.
Foreclosures will surely and unfortunately rise further for the next six months. The key question from a market point of view is whether there will be buyers to absorb distressed properties or if foreclosed properties will linger on the market for a long time. In recent months, buyers have come to the market strongly, often with multiple bids occurring on distressed sales. The tax credit should continue to help absorb and quickly clear off the foreclosed properties.

The advanced figure for initial jobless claims held steady the week of November 14 at 505,000. The 4-week moving average declined from 520,500 to 514,000.
While 505,000 initial claims for unemployment insurance are substantially above a normal level of mid-300,000, it is a substantial improvement over the 674,000 high reached this spring.
Insured unemployment was at 5,611,000 in the week ending November 7, a decline from 5,650,000 the previous week.

Mortgage Banker data on mortgage delinquency continues to show strain in the housing markets. Among outstanding mortgage loans on one-to-four unit residential properties, the delinquency rate was a seasonally adjusted 9.64 percent in the third quarter of 2009 compared to 9.24 percent in the previous quarter.
The delinquency rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure. Loans in the foreclosure process were 4.47 percent in the third quarter compared to 4.30 percent in the previous quarter.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

Comments? Questions? E-mail NAR Research.

NAR members, learn how you can add this commentary to your Web site, blog, or newsletter. Read more >