As California REO Inventory Depletes, Equity Sales Reach 4-Year Peak

While distressed sales continued to languish in California, equity sales, or non-distressed sales, firmed up and reached a four-year high in September, according to a report from the ""California Association of Realtors"":http://www.car.org/ (C.A.R).

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The share of non-distressed sales in September accounted for 63 percent of all sales compared to 62.2 percent in August and 50.8 percent in September 2011, C.A.R. reported.

The share of REO sales in September fell to 12.3 percent, down from 14.4 percent in August and 27.5 percent in September 2011.

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Short sales continued to be a popular alternative to foreclosure and accounted for 24.3 percent of all sales, up from 23 percent in August and 21.5 percent a year ago.

""While it's encouraging to see an improvement in equity and short sales from last year, a supply shortage continues to put a cap on sales, as housing inventory remains significantly below the 6- to 7-month supply we see in a balanced market. The REO market, in particular, was most affected by the lack of housing supply as both sales and inventory dropped nearly 60 percent from a year ago,"" said C.A.R. President LeFrancis Arnold in a release.

When combining all distressed sales, the share was 37 percent, down from 37.8 percent in August and 49.2 percent a year ago.

REO inventory stayed tight in September, with the Unsold Inventory Index for REOs showing a supply of 2.2 months in September. For short sales, the index was at 3.9 months and for equity sales, the index revealed a supply of 3.8 months.

C.A.R.'s Pending Home Sales Index (PHSI) stood at 115.4 in September, down from a revised 119 in August, but up from 114.5 index a year ago.