US home foreclosures in May jumped 90 per cent from a year earlier, reflecting a poor spring housing market and foreshadowing even higher levels later

US home foreclosures in May jumped 90 per cent from a year earlier, reflecting a poor spring housing market and foreshadowing even higher levels later in 2007, real estate data firm RealtyTrac said on Tuesday.

The May foreclosures - a sum of default notices, auction sale notices and bank repossessions - totalled 176,137, up 19 per cent from April, the firm said in its May 2007 US Foreclosure Market Report.

The number of filings in May was the largest amount since RealtyTrac started tracking foreclosure activity in January 2005.

‘After a barely perceptible dip in April, foreclosure activity roared back with a vengeance in May,’ James Saccacio, chief executive officer of RealtyTrac, said in a statement.

‘Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year,’ said Mr Saccacio. ‘Certainly not every community nationwide is seeing an increase in foreclosures, but foreclosed properties are becoming more commonplace and adding to the downward pressure on home prices in many areas.’

RealtyTrac said there was a national foreclosure rate of one foreclosure filing for every 656 US households during May.

The default rates in the subprime segment of the US mortgage market, which caters to borrowers with poor credit histories, have jumped in recent months as the housing industry has slowed and prices have fallen.

More than two dozen lenders in the subprime mortgage sector have collapsed as rising defaults drove them out of business during a downturn in the housing market.

Market observers are keeping a watchful eye on the subprime crisis because it has triggered broader concerns that the fallout may spread to mainstream lenders and damage the economy.

Nevada, once one of the hottest real estate markets and a favourite among investors, led the nation in May with one foreclosure filing for every 166 households, which was the nation’s highest for the fifth month in a row and nearly four times the national average.

Nevada’s foreclosure activity, at 5,235 foreclosure filings during the month, rose 40 per cent from April and was nearly five times the number reported in May of 2006.

Colorado came in second with one foreclosure filing for every 290 households, which was 2.3 times the national average. Colorado’s foreclosure activity, at 6,231 foreclosure filings in May, rose 9 per cent from the previous month and was an increase of more than 50 per cent from May 2006.

The state’s foreclosure total was the eighth-highest among the states.California, the largest state, reported foreclosure activity increasing by 30 per cent from the previous month and more than 350 per cent from May 2006, which boosted the state’s foreclosure rate to the third highest in the country.

California documented one foreclosure filing for every 308 households, which as more than twice the the national average.

Florida, Ohio, Arizona, Georgia, Michigan, Indiana and Connecticut were some of the other states with foreclosures rates ranking among the nation’s 10 highest in May.

The cities with the nation’s top three metropolitan foreclosure rates were all located in California, and three other California cities also documented foreclosure rates among the top 10.

A 49 per cent increase in foreclosure activity ensured that Stockton, California, would register the nation’s highest metropolitan foreclosure rate at one filing for every 88 households, which was nearly 7.5 times the national a average.

Merced, California, documented the second highest metro foreclosure rate, one foreclosure filing for every 100 households, followed by Modesto, California, with one foreclosure filing for every 118 households. Other California metros in the top 10 were Riverside-San Bernardino at No 5, Vallejo-Fairfield at No 6, and Sacramento at No 7.

Las Vegas at No 4, Denver at No 7, Detroit and No 8, and Miami at No 10 were other top 10 cities.

Source: The Business Times, 14 June 2007