Home sales increased by 22 percent year over year in September to a non-seasonally adjusted 5.2 million annual sales pace, below the August 2013 non-seasonally adjusted annual sales pace of 6 million. A slowdown in home sales is expected in the late-summer months. Home sales have increased year over year for the past 21 months, a further indication that the housing market continues to recover.
Home sales improvements were led by re-sales, which increased by 34 percent in September, followed by sales of newly constructed homes, which increased by 22 percent in September. REO sales and short sales decreased by 18 percent and 13 percent respectively, further indicating that the improvements are being led by more traditional segments of the housing market, and not by bargain-hunters. Distressed sales made up 14.6 percent of total sales in September 2013, a strong improvement from a year ago when distressed sales were 21.2 percent of total sales. Distressed sales are made up of REO and short sales, which were 8.2 percent and 6.4 percent, respectively, of total sales in September. The peak in the distressed sales share was in January 2009, when distressed sales made up 32.9 percent of total sales. REO sales made up 28.4 percent of sales at their peak, and this shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount to healthy sales than short sales. There will always be some amount of distress in the housing market, so one would never expect a 0 percent distressed sales share, but the pre-crisis share of distressed sales was about 2 percent.
Nevada had the largest share of distressed sales of any state at 35.2 percent in September, followed by Michigan (33.7 percent), Illinois (28.1 percent), Florida (27.0 percent), and Georgia (24.0 percent). California saw a 17.3 percentage point drop in the distressed sales share, the highest of any state. Las Vegas-Paradise, Nev. had the largest share of distressed sales of the largest 25 CBSAs at 37.7 percent, followed by Orlando-Kissimmee-Sanford, Fla. (32.9 percent), Chicago-Joliet-Naperville, Ill. (32.5 percent), Miami-Miami Beach-Kendall, Fla. (30.4 percent) and Riverside-San Bernardino-Ontario, Calif. (29.9 percent). Sacramento-Arden-Arcade-Roseville, Calif. had the largest drop in the distressed share, falling by 21.2 percentage points from 48.7 percent in September 2012 to 27.4 percent in September 2013.
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The distressed sales share for states and CBSAs listed in this report were calculated using sales from the past 12 months.