Dive Brief:

• The inventory of foreclosed houses on the market dipped by one-third in January compared with a year ago. This was welcome news to homebuilders, who compete with the artificially low price tags those empty houses carry.

• Although more foreclosures were completed in January than in December, the number of homeowners in “serious delinquency” dropped to a seven-year low, an indication that fewer homes will fall into foreclosure in the coming months, according to property information firm CoreLogic.

• CoreLogic Chief Economist Frank Nothaft credited job growth and rising home prices for the overall positive report.

Dive Insight:

When foreclosure activity increases, the price of other homes on the market drops in response because distressed properties sell at deep discounts. The formula, according to Black Knight: The asking price on foreclosure sales runs 26% lower than surrounding, non-distressed homes.

Market forces limit the price builders of new homes can charge in communities with large numbers of dwellings in foreclosure. As the foreclosure rate declines, homebuilders are able to raise their prices.