The buying comes at a time when the number of homeowners facing foreclosure is soaring. On Wednesday, RealtyTrac, which monitors foreclosures, said the number of homes facing foreclosure rose 65 percent in April compared with a year ago. For roughly half of the 243,353 homeowners receiving a foreclosure-related filing, it was their first notice.
It could get worse. Through November, some $20 billion to $25 billion in adjustable rate mortgages will reset each month. As interest rates tick up, many buyers will be unable to carry their monthly payments. Economist Mark Zandi of Moody's Economy.com, estimates there will be 2.25 million foreclosures this year, up from 800,000 at the low point three years ago.
"This assumes we only suffer a modest recession and moreover get some kind of meaningful federal housing policy that helps to stem the number of foreclosures," he says.
In addition, the inventory of unsold homes is still at a high level. According to government estimates there are 2.25 million empty houses for sale compared with 1.25 million in a normal year.
But some housing analysts see some encouraging signs. "We are hearing there is greater foot traffic at open houses and realtors are showing more homes," says Lawrence Yun, chief economist at the National Association of Realtors in Washington.