FHA: Fewer Home Approvals

The Federal Housing Administration suffered a 27% drop in market share from fiscal 2010 numbers. Department of Housing and Urban Development numbers show that while FHA refinance volume has increased by 9% since August, the 12% drag on purchase production has hurt the overall numbers in September vs. August. Coupled with this drop in monthly productivity has been a 30 basis point (or 0.3%) increase in delinquency in comparison to August numbers. 

A statistically significant number for the Chicago market specifically is the 13% drop in condominium closings, not surprising, as condominiums have been consistently falling out of favor due to the elimination of spot-approvals, and increased strictness of conditions that have been enforced since the housing bubble burst. And while FHA loan turn-times remained at a steady 5.9 weeks average from application to closing, it is an overall improvement from the 6.8 week average turn times at this time last year.

What this data shows is that while FHA loans are a solid product, the market for them has been deteriorating, with the expectation that this deterioration will continue for the forseeable future.

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