• New York  was saddled with an unemployment rate of 15.9% in July, up from 15.7% in June and 14.5% in May
  • New York was the early epicenter of deaths from COVID-19
  • As casinos reopened, Nevada’s unemployment rate fell to 14% in July, from 15% in June

The economies of New York, Nevada and New Jersey suffered the most from the multi-pronged crises of the COVID-19 pandemic, mortgage delinquencies, and job losses in July, according to a study by

Bankrate’s Housing Hardship Index uses metrics that examines a state’s mortgage delinquencies and unemployment rate in order to determine overall economic hardship.

New York had the highest hardship index reading of 24.28; the Empire State was saddled with an unemployment rate of 15.9% in July, up from 15.7% in June and 14.5% in May. New York’s mortgage delinquency rate, however, slipped to 8.38% in July, from 9.65% in June.

“New York, the early epicenter of deaths from COVID-19, was the state affected most dramatically by the coronavirus recession in July,” Bankrate's Jeff Ostrowski said. “New York absorbed a one-two punch from double-digit unemployment and a high rate of mortgage delinquency. As the fast-changing coronavirus contagion evolves, the pandemic’s economic effects are shifting.”

While New York City has slowed the spread of COVID-19 in recent months, the New York economy remains wounded by the coronavirus recession.

For example, Manhattan home sales have slowed dramatically, but summer has brought a new round of activity in the city’s outer boroughs and in the suburbs.

“If you look at the suburban markets around New York, they’re showing a lot of strength,” said appraiser Jonathan Miller, president of Miller Samuel Inc. in New York City, Bankrate reported.

Miller predicts a wave of evictions rather than a flood of foreclosures.

Nevada, the hardest-hit state in April and May, ranked second place on the hardship scale in July with an index reading of 22.76.

As casinos reopened, Nevada’s unemployment rate fell to 14% in July, from 15% in June and a recent peak of 25.3% in May. Nevada’s mortgage delinquency rate dropped to 8.77% in July, from 9.71% in June and 9.99% in May.

Nevada’s economy – dominated by casinos, conventions and concerts – was badly hurt by COVID-19.

But Bob Hamrick, chairman and chief executive of Coldwell Banker Premier Realty in Las Vegas, said Nevada’s housing market has held up well.

“Our entire state is a hospitality state. Our convention business has come to an absolute halt,” he said, according to Bankrate. “Against that backdrop, prices have continued to rise. The perception that there’s going to be a lot of foreclosures is entirely unfounded, because you don’t foreclose on equity. You foreclose on debt.”

New Jersey, the hardest-hit state in June, moved into third place in July on Bankrate’s hardship scale with an index reading of 22.61.

The Garden State saw its mortgage delinquency rate fall to 8.81% in July, from 10.11% in June, while unemployment dropped to 13.8% in July, down from 16.6% in June.

New Jersey’s fortunes are closely tied to its larger neighbor, New York.

Before the pandemic, 400,000 New Jersey residents commuted daily to New York City for work, making New Jersey the unofficial “sixth borough” of New York City.

“New York City has been the regional economic locomotive for New Jersey,” said Rutgers University professor James W. Hughes. “The great bulk of New Jersey’s economy is in the 11 counties in Central New Jersey and Northern New Jersey that have linkages to New York City. Whatever happens in New York feeds back into New Jersey.”

New Jersey’s housing market also has never fully recovered from the Great Recession.

Ostrowski told International Business Times: “New Jersey and New York have suffered economic slowdowns because those states were the epicenter of the coronavirus pandemic in the spring. As a result, those states have been especially cautious about reopening their economies.”

The vastly different states of Mississippi and Massachusetts rounded out the top five on Bankrate’s hardship scale for July.

Mississippi reported a mortgage delinquency rate of 11.36% in July, with unemployment of 10.8%.

Massachusetts had the worst unemployment rate in the nation in July at 16.1% – but that was down from 17.4% in June. However, its mortgage delinquency rate was rather low at 5.81%.

“Massachusetts’ high unemployment rate seems to be a factor [in] its slow reopening of the state economy,” Ostrowski told IB Times. “The state was hit hard by COVID cases early in the pandemic. A slower tourism season could play a role, too – Cape Cod is a popular destination during normal years.”

Ostrowski added that Massachusetts’ low mortgage delinquency rate is “fairly common among states with strong home values.”

California, he noted, is another place with high unemployment but low delinquency rates.

“In general, homeowners who have built up significant equity in their homes don’t default,” he explained.

Greg McBride, Bankrate’s chief financial analyst, said: “States experiencing high unemployment will see mortgage delinquencies surge if unemployment remains elevated as forbearance periods expire. This year may see the worst for unemployment, but 2021 will likely bring the worst for mortgage delinquencies and defaults.”

Bankrate pointed out that foreclosures are rare events thus far. Under terms of the Coronavirus Aid, Relief and Security Act, or CARES, requires Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs to permit borrowers to skip up to a year of payments without penalty.

“Those mortgage relief initiatives are mandated by federal law, but lenders also have voluntarily extended forbearance to more than a million borrowers with jumbo loans and other types of mortgages not backed by the federal government,” Bankrate noted.