Freddie Mac also noted a -14.1% annualized drop in the size of its mortgage portfolio to $2.03 trillion. That’s the largest decline by far in the past 12 months and represents a nearly 5x reduction over the March annualized rate drop of -2.9%.

Freddie Mac was taken over by the federal government in September 2008 and has been operating ever since as a conservatorship.

The mortgage volume study is available here.

Read: The Cities with the Most Homes Underwater

In some of America’s largest metropolitan regions, however, the housing crash dealt a far worse blow. In these areas — most of which are in California, Florida and the southwest — home values were cut in half, unemployment skyrocketed, and 50% to 70% of borrowers now find themselves with a home worth less than the value of their mortgage. 24/7 Wall St. reviewed the 100 largest housing markets and identified the 10 with the highest percentage of homes with underwater mortgages.

Svenja Gudell, senior economist at Zillow, explained in an interview with 24/7 Wall St. that the markets with the highest rates of underwater borrowers are in trouble now because of the rampant growth seen in these cities prior to the recession. Once home prices peaked, which was primarily in late 2005 through 2006, all but one of these 10 housing markets lost at least 50% of their median home value.

Making matters worse for families with high negative equity in these markets is the increased unemployment. “If you have a whole lot of unemployment in an area, you’re more likely to see home values continue to decline in the area as well,” says Gudell. While in 2007 many of these markets had average or below average unemployment rates, the recession took a heavy toll on their economies. By 2011, eight of the 10 markets had unemployment rates above 10%, and three — all in California — had unemployment rates of above 16%, nearly double the national average.

24/7 Wall St. used Zillow’s first-quarter 2012 negative equity report to identify the 10 housing markets — out of the 100 largest metropolitan statistical areas in the country — with the highest percentage of underwater mortgages. Zillow also provided us with the decline in home values in these markets from prerecession peak values, the total negative equity value in these markets and the percentage of homes underwater that have been delinquent on payments for 90 days or more.

These are the cities with the most homes underwater.

RealtyTrac published the number of new home foreclosures in April in the 50 largest metropolitan statistical areas in the U.S. Of those 50 areas, ten had more than double the national foreclosure rate, which is one out of every 698 new homes. In California’s Inland Empire metropolitan area, the rate was more than triple that. Using RealtyTrac’s foreclosure rates and and home price data from Fiserv Case-Shiller, 24/7 Wall St. reviewed the ten metropolitan areas with the highest foreclosure rates.

The continuing high rates of foreclosures in some areas is a disturbing trend, says RealtyTrac’s vice president, Daren Blomquist. Although the national foreclosure rate appears to have peaked, he explains, the massive number of remaining properties yet to be foreclosed may continue to hurt the U.S. market in the long-term. The large number of new foreclosures “means that distressed property sales will continue to represent a large portion of overall sales for at least the remainder of this year, which in turn will keep a lid on any robust home price recovery,” Blomquist says.

After reviewing the markets with the highest foreclosure rates, it is clear that regions with the most foreclosures to date are the ones worst affected by the housing crisis. Seven of the ten metro areas on this list had among the top ten largest declines in home value from their pre-recession peaks. In six of the ten regions, houses lost more than half their value in less than six years. In Las Vegas, home prices plummeted 61.8% between the beginning of 2006 and the end of last year.

While all ten metropolitan areas on this list have a high foreclosure rate compared to the national average, in some cities foreclosures have begun to decline, while in others they continue to increase. For example,  Of these regions with the highest foreclosure ,rates the number of new foreclosures fell by 44% in Phoenix and by 66% in Las Vegas in one year. Meanwhile, foreclosures rose 38% in Miami and 59% in Tampa.

24/7 Wall St. spoke with Trulia’s chief economist Jed Kolko. According to Kolko, while the overall decline in home prices is the major underlying force behind these areas’ high foreclosure rates, it is the legal system of the regions’ respective states that is affecting whether foreclosures are still rising or declining. Florida has a long foreclosure process, which involves the courts on many occasions, while Nevada’s process is much shorter and non-judicial. Florida is therefore far behind in liquidating its foreclosure inventory, while Nevada is far along the process.

24/7 Wall St. examined RealtyTrac’s latest foreclosure figures of new homes for April, 2012, as well as the changes in the number of new foreclosures from a month prior and a year prior. In addition, we reviewed historical, current, and projected home price changes, provided by Fiserv-Case Shiller.

These are the ten cities with the most homes in foreclosure

The median existing-home sales price also rose, up 10.1% year-over-year to $177,400. The March median price was up a revised 3.1% year-over-year, making this the first time that prices have risen for two months in a row since June-July of 2010. The NAR’s chief economist expects existing home prices to rise 1%-2% by the end of the year and to continue to improve in 2013.

There was also some mixed news for sellers:

Total housing inventory at the end of April rose 9.5 percent to 2.54 million existing homes available for sale, a seasonal increase which represents a 6.6-month supply at the current sales pace, up from a 6.2-month supply in March. Listed inventory is 20.6 percent below a year ago when there was a 9.1-month supply; the record for unsold inventory was 4.04 million in July 2007.

With prices rising in some market, inventory is coming back, and sales of distressed properties declined slightly in April, from 29% of sales in March to 28% and 34% in April 2010. The housing market continues to inch its way out of a deep hole.

Paul Ausick

The tale is similar to competitor that told by Home Depot Inc. (NYSE: HD) last week. The first quarter of this year got a boost from the warmer weather, which moved some sales into the first quarter and saw sales soften toward the end. Lowe’s reported EPS of $0.43, a penny above the consensus estimate on revenue of $13.2 billion, which also beat the consensus estimate of $12.99 billion.

Where Lowe’s stumbled was in its full-year guidance for EPS of $1.73-$1.83, compared with a prior analysts’ estimate of $1.87. That lower estimate is due in part to a 52-week fiscal year compared with a 53-week year that ended in early February 2012. Lowe’s noted that the extra week added $514 million to revenues and $0.05 to EPS in the fourth quarter of fiscal year 2012.

Like Home Depot, Lowe’s is concerned about the overall US economy:

We continue to maintain a cautious view of the housing and macro demand environment, and are focused on what we can control.

The company plans to open 10 new stores in the 2013 fiscal year and to increase same-store sales by 1%-3%. Same-store sales in the first quarter rose by 2.6% worldwide and 2.7% in the US.

The cautious outlooks from Home Depot and Lowe’s stem from continuing low housing prices which could encourage more buyers than remodelers. A recent survey by the National Association of Home Builders indicates that remodeling projects are up, particularly for bathrooms and kitchens. A majority of those projects are not aimed at increasing a home’s resale value, but geared for upgraded amenities. For the home improvement stores, they have to wonder if these kinds of projects will continue to increase or if those sales, too, were front-loaded due to warm weather.

Lowe’s shares are down about -6% in pre-market trading this morning, at $26.76 in a 52-week range of $18.07-$32.29. Shares of Home Depot are also down about -1.6% at $46.31 in a 52-week range of $28.13-$52.88.

Paul Ausick

Today’s Facebook IPO will make a lot of my Bay Area neighbors very rich, at least on paper. And many more of my neighbors are hoping that Facebook’s IPO will set off a strong wave of housing demand that lifts local prices and finally consigns the housing bust to history. And I say to my neighbors: be careful what you wish for. Rarely are there winners without losers. Here’s what Facebook’s IPO – and the strengthening local economy – mean for the Bay Area housing market.

Over the past year, house prices have picked up and rents have been booming in the “Facebook Metropolitan Area” — the 10-mile circle around the Facebook’s Menlo Park campus, roughly from Foster City on the Peninsula down to Sunnyvale in the South Bay, plus Union City and Fremont just across the bridge in the East Bay.

Note: based on the Trulia Price Monitor and Trulia Rent Monitor, which adjust for the mix of homes and neighborhoods. Changes are year-over-year.

Even before today’s IPO, home prices and rents were rising in the Facebook metro area faster than in the San Francisco Bay Area overall. As Facebook’s flush owners realize their gains, there’ll be even more money chasing real estate in the Facebook metro area and in the San Francisco Bay Area generally. This new wealth should push up prices more than rents since many of Facebook’s employees will make the move to homeownership. And, Facebook aside, job growth in the Bay Area is already strong, so the Facebook IPO is adding fuel to an existing fire.

The Facebook IPO will create lots of winners in the Bay Area. These include employees and investors, of course, who can spend their new wealth on homes or whatever else they want. Other winners are people and businesses who have what Facebook millionaires want – including homeowners looking to sell, luxury car dealers, exotic-adventure-vacation tour operators, and so on. The dry cleaner and coffee shop owners in Menlo Park will be happy, too, but Facebook won’t change their lives: Facebook employees might celebrate their IPO by buying a car ten times more expensive than their current clunker (just don’t drive it to work), but they’re probably not going to go from one latte a day to ten.

But because Facebook is in the Bay Area, its IPO will create losers. Here’s why. If Facebook were in Texas or North Carolina, developers would have been building new homes in anticipation of this day. But in the Bay Area, water and the hills leave little land for development: the area in the bay under the Dumbarton Bridge would be an easy commute to Facebook if you could only build housing on the water. In addition, building regulations make development difficult on the precious flat land that exists. As a result, little new construction is underway in the Bay Area – far less than in other metros with similar job growth. Furthermore, San Francisco and San Jose were spared the worst of the housing crash and have relatively few homes in foreclosure. Without new construction or foreclosed homes coming onto the market, Bay Area housing inventory is vanishing: it’s down 40% year-over-year.

A 15-year fixed-rate loan averaged 3.04%, also an all-time low, besting the 3.05% rate from a week ago. A year ago the rate stood at 3.80%.

The interest rate on a Treasury-indexed hybrid 5-year adjustable-rate mortgage loan rose to 2.83%, down from 2.81% last week, but still down from 3.48% a year ago.

According to a Freddie Mac executive:

The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week.

Data earlier this week on mortgage applications showed a rise in refinancings, but an overall dip in the seasonally adjusted index of total mortgage applications.

Paul Ausick

The Mortgage Bankers Association released information that showed that:

The combined percentage of loans in foreclosure or at least one payment past due was 11.33 percent on a non-seasonally adjusted basis, a 120 basis point decrease from last quarter and was 98 basis points lower than a year ago.

The improvement seems substantial. It really is not, given that the number remains so high and that the figure for homes in actual foreclosure is alarming. The MBA reports:

The percentage of loans on which foreclosure actions were started during the fourth quarter was 0.96 percent, down three basis points from last quarter and down 12 basis points from one year ago.

The figures also avoid discussion of so-called shadow inventory, which are homes that banks have foreclosed on but have not put on the market. The number is sometimes put as high as two million.

The plague of these foreclosures continues to spread beyond the properties themselves. Houses in a neighborhood where there are foreclosed homes have a sort of stigma. And foreclosed homes generally sell at below market prices, which tends to pull down the prices of many homes in the vicinity.

The only ways to address the foreclosure problem quickly are ones that will not be taken, because they have not been up until now. The government and banks know that without financial aid or a drop in the principle on mortgages that are in trouble, people cannot stay in homes or will abandon hope that these homes will ever be worth more than the loans they carry. The federal government is too large to address the problem at the very local level at which it needs to be addressed. Banks have too many incentives to sell homes rather than alter mortgages. Bureaucracy and self-interest will continue to keep solutions from implementation. There are also fears that solutions will not work, which would leave some people in the federal government vulnerable to attack for a failure.

The mortgage problem will not be fixed soon because so many parties have no reason to fix it, and the people who own the homes cannot.

Douglas A. McIntyre

As a matter of fact, they continue to push other home prices down. And, there is no evidence that short sales are an indication of upcoming foreclosure data improvement. Foreclosures continue to be very high in the hard hit markets of California, Arizona, and Nevada. The markets in those states have hardly improved at all on an historics basis.

Douglas A. McIntyre

April’s single-family housing starts rose by 2.3%, while multi-family homes rose by some 3.2% in April.

The trick part of the equation is Building Permits, which fell by 7.0% to an annualized level of 715,000 in April.  That figure was 769,000 in the month of March.

The Northeast was a drag as starts were down just over 20%, followed by just over an 8% drop in the West.  The South led starts with a gain of more than 11% and the Midwest grew by almost 7%.

JON C. OGG