Distressed sales dropped by 2.9 percentage points year over year since October 2015, according to a report released Wednesday by CoreLogic.
Principal Economist Molly Boesel with CoreLogic said distressed sales, of which REO sales made up 5 percent and short sales made up 2.6 percent in October 2016, fell to 7.7 percent that month: the lowest distressed sales share for any month since October 2007.
“At its peak in January 2009, distressed sales totaled 32.4 percent of all sales with REO sales representing 27.9 percent of that share,” Boesel said. “The pre-crisis share of distressed sales was traditionally about 2 percent. If the current year-over-year decrease in the distressed sales share continues, it will reach that “normal” 2-percent mark in mid-2018.”
She said all but eight states recorded lower distressed sales shares in October 2016 compared with a year earlier. Maryland led with the largest share of distressed sales of any state at 18.6 percent, followed by Connecticut at 18.3 percent, Michigan at 17 percent, New Jersey at 15.8 percent, and Illinois at 14.7 percent.
“While some states stand out as having high distressed sales shares, only North Dakota and the District of Columbia are close to their pre-crisis levels,” Boesel said.
Cash sales accounted for 31.8 percent of all home sales in October 2016, down 2.7 percentage points from the previous year.
“The cash sales share peaked in January 2011 when cash transactions accounted for 46.6 percent of total home sales nationally,” Boesel said. “Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. If the cash sales share continues to fall at the same rate it did in October 2016, the share should hit 25 percent by mid-2018.”
REO sales had the largest cash sales share in October 2016 at 59.2 percent, according to CoreLogic data. Resales had the next highest cash sales share at 31.7 percent, followed by short sales at 30.2 percent and newly constructed homes at 15.9 percent. While the percentage of REO sales within the all-cash category remained high, REO transactions have declined since peaking in January 2011.