Foreclosures, ‘Short Sales’ Fuel Existing-Home Sales Surge

Bolstered by discounted distressed properties, sales of existing homes rose in January, marking three gains over the past four months, as inventories continued to decline, according to the National Association of Realtors.
Total sales (completed transactions) of single-family homes, townhomes, condominiums and co-ops increased 4.3 percent to a seasonally adjusted annual rate of 4.57 million in January, from a downwardly revised 4.38 million-unit pace in December.
That’s 0.7 percent above a spike to 4.54 million in January 2011.
Distressed homes – foreclosures and “short sales” which sell at deep discounts – accounted for 35 percent of January sales (22 percent were foreclosures and 13 percent were short sales), up from 32 percent in December; they were 37 percent in January 2011.
Homebuyers are taking advantage of some positive and negative economic factors – historically low mortgage rates and consistent job growth are among the positive.
They are also the beneficiaries of home prices that are still very much depressed in certain regions of the nation, particularly those hit hardest by foreclosures.
“The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” Lawrence Yun, NAR chief economist.
Total housing inventory at the end of January fell 0.4 percent to 2.31 million existing homes available for sale, which represents a 6.1-month supply at the current sales pace, down from a 6.4-month supply in December.
“Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets,” Yun said.
The national median existing-home price for all housing types was $154,700 in January, down 2.0 percent from January 2011.
Yun said that a government proposal ­– backed by the Federal Reserve in a “white paper” to Congress – to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.
Total unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 20.6 percent below a year ago.
“With other favorable market factors, these are hopeful indicators leading into the spring home-buying season,” said NAR President Moe Veissi, broker-owner of Veissi & Associates in Miami. “We’re cautiously optimistic that an uptrend will continue this year.”

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