AP analysis: Foreclosures stabilize in key states
— -- Even as Americans suffer rising unemployment, foreclosure rates in three states hit hardest by the housing bust —California, Arizona and Florida— stabilized in June, offering hope that the worst of the real estate crisis is over, according to the Associated Press' monthly analysis of economic stress in more than 3,100 counties.
The latest results of AP's Economic Stress Index show foreclosure and bankruptcy rates held steady from May in some states. Yet mounting unemployment is hampering an economic recovery in some regions, especially the Southeast and industrial Midwest.
The AP calculates a score from 1 to 100 based on each county's unemployment, foreclosure and bankruptcy rates. The higher the score, the higher the economic stress. The average county's Stress score rose to 10.6 in June, up from 10 in May, mainly because of rising unemployment.
In June 2008, the average county's Stress score was 6.7. The pain was lower then because the economy was still expanding. In fact, the second quarter of 2008 was the last time the economy grew.
Under a rough rule of thumb, a county is considered stressed when its score zooms past 11. In June, 41% of the counties scored 11 or higher, up from 36% in May and 34% in April. The latest reading was slightly worse than for February and March, when nearly 40% of counties met or exceeded that threshold.
The national economy, meanwhile, shrank at a pace of just 1% in the second quarter of the year, according to figures released Friday. It was a better-than-expected showing that provided the strongest signal yet that the recession is finally winding down.
In June, foreclosure rates held steady for Arizona, California and Florida at 4.1%, 3.5% and 3.4%, respectively.
"It's obviously good news to stop the losses," said Jim Diffley, a regional economist at consulting firm IHS Global Insight.
He cautioned, though, that even as foreclosures level out in some states, they're doing so "at very high levels."
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