The percentage of their homes that Americans own is near its lowest point since World War II, the Federal Reserve said Thursday. The average homeowner now has 38 percent equity, down from 61 percent a decade ago.
The latest bleak snapshot of the housing market came as mortgage rates hit a new a low for the year, falling below 4.5 percent for a 30-year fixed loan. But even alluring rates have failed to deliver any lift to the depressed housing industry.
Of the people who have mortgages, 23 percent are "under water," meaning they owe more on the mortgage than their home is worth, according to the private real estate research firm CoreLogic. An additional 5 percent are nearing that point.
The outlook for the housing market remains dim.
Fixed mortgage rates average 4.49 percent, extremely low by historical standards, and have fallen for eight straight weeks. But most people can't meet tougher lending requirements. Falling rates make it easier to refinance, too, but many of the people who can afford to do that already have.
And foreclosures keep hammering the housing market. On Thursday, the Obama administration said the three largest U.S. lenders - Wells Fargo, Bank of America and JPMorgan Chase - haven't helped enough people lower their mortgage payments to stay in their homes.
The government said it has started withholding the cash incentives it established for lenders under its 2-year-old foreclosure prevention program. The administration had hoped the program would prevent as many as 4 million foreclosures, but it has helped fewer than 700,000 people
Many foreclosure sales have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years. When those foreclosures go through, prices may fall even further
The report found household debt declined at an annual rate of 2 percent from the previous quarter, mostly because of a decline in mortgage debt, which has fallen for 12 straight quarters.
But the decline is deceiving. Mortgage debt is coming down because so many Americans are defaulting
on payments and losing their homes to foreclosure, not just because people are paying off loans.
"A lot of this debt reduction is not voluntary," said Dana Saporta, director of U.S. economics at Credit Suisse.