US housing rebound: 'Distressed' share of home sales falls to 9 percent

Foreclosed or 'short sale' properties have dropped below 10 percent of sales for the first time since the Great Recession. In 2009, more than 1 in 3 home sales were distressed.

|
Larry Downing/Reuters/File
A new home is being built next to a home with a for-sale sign in Vienna, Va., in this March 27, 2014, photo. The pace of home sales improved in July.

The pace of home sales improved in July, and the share of those sales that represents foreclosures or other “distressed” properties fell below 10 percent for the first time since the Great Recession.

This is good news for a US housing market that’s still in the process of recovery from an extraordinarily deep down cycle.

Strengthening US employment has helped to drive demand for homes, while sales were also bolstered by a rising inventory of properties for sale.

Sales of previously owned homes are running at an annualized pace of 5.15 million units, the highest level seen this year. Sales have edged up for four straight months, although the rate is still a bit below last year’s summer peak.

“The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market,” said chief economist Lawrence Yun of the National Association of Realtors, in releasing the data.

Distressed homes that are transferred either through a foreclosure or “short sale” (with proceeds failing to pay off the seller’s mortgage) accounted for 9 percent of July sales, the first single-digit level seen since the group began reporting on the category in October 2008.

Such distressed properties accounted for 15 percent of sales a year ago – and as much as 36 percent of sales at the depth of the housing crisis in 2009.

Rising inventories of homes for sale are another sign the market is gradually normalizing. It suggests that fewer sellers feel unable or unwilling to sell at current prices – often because of high mortgage balances they owe.

The improvement in the housing market coincides with recent months of solid job growth for the economy. And although the outlook for Federal Reserve policy suggests that interest rates will edge up over time, mortgage rates remain historically low.

But the housing recovery is still a work in progress, and much depends on younger households, many of whom feel strapped by student debts and relatively high housing costs, whether renting or buying.

“The housing market recovery can only progress if new buyers enter the market, thus allowing current owners to downsize or move up,” economists Patrick Newport and Stephanie Karol of IHS Global Insight write in a commentary on the new housing numbers.

“We will need continued job gains and income growth in order to improve the share of first-time buyers, especially under currently tight credit conditions,” they write.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to US housing rebound: 'Distressed' share of home sales falls to 9 percent
Read this article in
https://www.csmonitor.com/Business/2014/0821/US-housing-rebound-Distressed-share-of-home-sales-falls-to-9-percent
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe