Sense on Cents

This past May, I designated mortgage delinquencies as “The Most Critical Economic Statistic.” I wrote then and continue to believe now:

Which economic statistic is the most important? Unemployment? Housing starts? Trade deficit? Inflation? Retail sales?

Well, they are all important . . . but as I review the many statistics, the economic data that I believe most significant are loan delinquencies.

While assorted analysts and economists have called the bottom in housing numerous times, rest assured a true bottom will not be established until we see a meaningful decline in mortgage delinquencies. Why? There is a strong correlation between delinquencies, defaults, and foreclosures. Until delinquencies decline, the supply of homes coming onto the market through the foreclosure process will not abate.

While analysts and economists have been wrong in their calls to this point, I keep my eyes and ears open when another entity calls a peak in the rate of delinquencies. I witnessed another one again this morning.   (more…)