REOs and Shorts Accounted for 39% of Q1 Existing-Home Sales

REOs and Shorts Accounted for 39% of Q1 Existing-Home Sales

Data released by the National Association of Realtors (NAR) Tuesday show that distressed properties – including bank-owned homes and pre-foreclosure short sales – made up 39 percent of the first quarter’s existing-home sales. That’s up from 36 percent a year earlier.

Overall, sales of previously owned homes rose to an annual rate of 5.14 million units during the first three months of this year, the trade group reported. That pace is 8.3 percent higher than during the previous quarter and essentially flat – down just 0.8 percent – compared to the same period last year.

NAR says existing-home sales continued to recover in Q1 with quarter-over-quarter gains recorded in 49 states and the District of Columbia. Vermont was the only state to post a decline. There, existing-home sales dropped 7.1 percent.

With distressed homes grabbing such a large share of the market, the median home price in most areas continues to slide. NAR says distressed properties typically sold at a discount of about 20% during the first quarter. According to the trade group’s study, the national median existing single-family home price was $158,700 in the first quarter, down 4.6 percent from $166,400 in the first quarter of 2010.

Lawrence Yun, NAR’s chief economist, says lower priced homes have seen the best sales performance. “The biggest sales increase has been in the lower price ranges, which are popular with investors and cash buyers,” he said. “The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales.”

Yun also noted, “When buyers principally purchase distressed properties in a given market, the recorded prices will be very low, which is what we’re seeing now in much of the country.”

According to NAR’s latest findings 118 of the 153 metropolitan statistical areas included in the study showed price declines in the first quarter when comparing figures from a year earlier.

Although sales nationally are slightly below a year ago, the volume of homes sold for $100,000 or less in the first quarter was 8.9 percent higher than the first quarter of 2010, creating a downward skew on the overall median price, NAR explained in its report.

The share of all-cash home purchases rose to 33 percent in the first quarter from 27 percent in the first quarter of 2010.

NAR says investors accounted for 21 percent of first quarter transactions, while first-time buyers purchased 32 percent of homes, and repeat buyers claimed a 47 percent market share.