A key stat suggests the housing market won't see 'cascading' price drops anytime soon

• Fannie Mae reported that the single-family serious delinquency rate is down 0.54% in July.
• The latest reading is below the pre-pandemic low of 0.65% and the lowest rate since 2002.

The unaffordable housing market doesn't look like it will see widespread price declines in the near future, according to the some of the latest mortgage delinquency data.

In July, the rate of single-family mortgages that were considered "seriously delinquent"—defined as late on payments by 90 days or more, or already in foreclosure—was unchanged month-over-month at 0.56%, according to Freddie Mac, though the rate was down annually from 0.73% since July 2022.

For Fannie Mae, the other government-backed mortgage finance giant, serious delinquencies fell to 0.54% in July from 0.55% in June.

In a Monday edition of his newsletter Calculated Risk, veteran real estate expert Bill McBride pointed out that this is the lowest rate since before the housing bust of 2008, as well as below the pre-pandemic low of 0.60%.

"Freddie's serious delinquency rate peaked in February 2010 at 4.20% following the housing bubble and peaked at 3.17% in August 2020 during the pandemic," McBride wrote.

The decline in serious delinquencies point to low rates of foreclosures, which in turn suggest stable prices. Homes that are sold in foreclosure are often priced lower, as lenders are aiming to make their money back. The dynamic was on display in 2008, when a wave of bank foreclosures dragged the US housing market down, with prices plummeting as much as 20% in parts of the country.

It's worth noting, too, that the numbers from Fannie Mae and Freddie Mac are highly representative of the US mortgage market as a whole, as a majority of mortgages—65%, by the Fed's calculations—are packaged into mortgage-backed securities issued by the two agencies.

Here's what the delinquency numbers say, in McBride's words:

"Since lending standards have been solid and most homeowners have substantial equity there will not be a huge wave of single-family foreclosures this cycle. This means that we will not see cascading price declines like following the housing bubble."

McBride, who Business Insider has profiled in the past as the inventor of "the economics blogosphere," publishes regular housing market updates ranging from trend pieces to more granular data, such as delinquency rates or multifamily starts.