The percentage of total home sales that were REO sales declined substantially from February to March from 9.7 percent down to 8.4 percent, a drop of 13.4 percent, indicating that the market as it pertains to distressed assets is "healing" and "normalizing," according to CoreLogic's Cash Sales Share Data for March 2015 released Thursday.
In January 2011 at the height of the foreclosure wave, when cash sales reached their peak, REO sales made up 23.9 percent of all home sales, according to CoreLogic. Resales, which typically comprise about 80 percent of cash sales, have the most weight on the overall share of cash sales.
"The drop in REOs indicates that the market continues to heal and normalize as it pertains to distressed assets," said Sam Khater, deputy chief economist at CoreLogic. "But the Great Recession will still have cast a long shadow on the real estate market and REO sales will remain elevated for years as hardest hit areas and slow to react areas continue to recover."
The cash sales share for REO properties dropped by more than 3 percentage points month-over-month in March 2015 down to 56.2 percent, meaning that 56.2 percent of REO sales during the month were cash sales. As has historically been the case, REO sales had the largest cash sales share in March, followed by resales (34.5 percent), short sales (31.6 percent), and new home sales (14.9 percent). All those numbers represented declines from February, according to CoreLogic.
March 2015 marked the 27th consecutive month of year-over-year declines for overall cash sales, which made up 34.6 percent of total home sales during the month. The peak for cash sales share was 46.5 percent, achieved in January 2011; prior to the housing crisis, cash sales share averaged about 25 percent. CoreLogic estimates that if the current rate of decline continues, the cash sales share will be back down to 25 percent by the middle of 2016.