A summer-long rally on U.S. subprime credit default swaps ended in August as the American economy lapsed into a period of uncertainty, Fitch Solutions said Friday. Prices on subprime CDS fell 1.6% in August to 12.11, the lowest level recorded in five months. Credit default swaps are a hedge against default risk, which is higher for subprime mortgages. The 2007 vintage performed the worst, with prices dropping 18.8%. Still, prices on subprime CDS are still 12.1% above year ago levels. "Reduced expectations for U.S. economic growth and its implications for U.S. housing may be weighing on subprime prices," said David Austerweil, director of Fitch Solutions. "While newly delinquent loans have risen each of the last four months, delinquencies increased substantially for every vintage in August, possibly indicating renewed strain for homeowners." Fitch solutions noted the backlog of foreclosed properties rose over the course of the past eight months. The percentage of homes in foreclosures within the 2006 vintage CDS class hit 21.2% in August, up 3.8% from July and 17.1% year-to-date. The current-to-delinquent roll rate increased by 8.8% month-over-month to reach 8.1%. "Subprime homes in foreclosure are at their highest levels since deal inception," said Fitch Solutions senior director Alexander Reyngold. "Making matters worse is that subprime loans are not becoming real estate owned and liquidated fast enough to reduce the balance." Fitch did note one silver lining: the year 2011 brought a significant increase in the balance of loan modifications completed in the nation. "The percentage of loans with balance modifications that subsequently became 60-days or more delinquent in the 2007 vintage has declined by 24.6% year-to-date," Fitch said. Write to Kerri Panchuk.