The Federal Housing Administration’s latest Outlook Report shows that reverse mortgage applications continue to slide as home prices continue to struggle to find a bottom. In January, the agency reported it received 5,805 applications for reverse mortgages (HECM), down 16.2% from the prior month and 54.2% lower than the same period in 2009. In January the industry endorsed 7,628 HECMs, consisting of 6,911 traditional HECMs, 113 HECM for purchase loans, and 605 HECM refis. Total maximum claim amounts came in at $2.1 billion in January, down from $2.3 billion in December.
These numbers come as the National Association of Realtors said that sales of previously owned U.S. homes unexpectedly declined in January for a second month, and that purchases fell 7.2 percent, the second-largest decline ever, to an annual pace of 5.05 million. Distressed sales are distorting prices as more sellers are entering short sales and the lack of job growth in the economy add strain to an already tenuous housing market. With the termination of the first time home buyer tax credit on the horizon, the skies look gray for home prices in the coming months.