Tuesday, May 17, 2011

Which months have the most foreclosures?

At the back of the April foreclosure report, I added an extra appendix that looks at seasonal factors in foreclosure sales and filings. While I only have three full years of monthly data to use, there are still some helpful insights into month-by-month trends in foreclosures since 2007.

The following is adapted from the April report:

Historically and on a nationwide basis, foreclosure filings have tended to peak late in the first quarter and early in the second quarter. This may be due to the fact that households often tend to default on mortgages during and immediately after the holiday season in December. This is followed by an increased number of foreclosure filings three to four months later. Note: Averages are based on monthly date from 2008 through 2010.

Foreclosure sales, on the other hand, tend to peak in both January-February and during summer and early autumn. The increases found during January and February are likely due to increases in the speed with which foreclosures are processed following the holiday season. Traditionally, some loan servicers have held off pushing loans to the final stage of foreclosure until after the holidays. The increases in sales found during the summer and early autumn months likely reflect the increased number of filings that occur during March and April. As these filings move through the system, they show up as sales at auction several months later.

In each month from January through April of this year, there have been fewer new foreclosure filings that during the same months during the years of 2008, 2009 and 2010. Foreclosure filings activity is clearly well below activity reported in recent years.

Unlike foreclosure filings totals, foreclosure sales at auction totals have not shown any notable downward trend during the early months of this year. In fact, foreclosure sales totals from March and April were above totals from 2008 and 2009.