While sales of distressed properties-foreclosures and short sales- have shrunk since the first of the year, a surge in sales of “normal” non-distressed properties has pushed total home sales through June 4.5 percent higher than last year even though buyers face by tight credit and low inventories.
With attention focused on extraordinarily tight inventories that have restricted sales during the past six months, market share of non-distressed homes are at their highest level since August 2008, a sign of strengthening demand from buyers realizing their time has come to act before prices increase further, a slowly improving employment picture and greater consumer confidence.
During the January to June period, the number of non-distressed sales is up 15 percent over the same period last year, according to CoreLogic.
The increase in non-distressed sales is strengthening prices. Excluding distressed sales, home prices nationwide increased on a year-over-year basis by 3.2 percent in June 2012 compared to June 2011. On a month-over-month basis excluding distressed sales, home prices increased 2.0 percent in June 2012 compared to May 2012, the fifth consecutive month-over-month increase., according to the National Association of Realtors.
Both supply and demand are playing a role in the decline of distress sales and increase in normal sales. In June, the distressed share of sales fell to 21 percent, the lowest level in almost four years. The months’ supply of distressed properties has been steadily decreasing over the first half of the year and now stands below seven months, equaling the same level of the supply of active listings.
Increased competition for the limited inventory of non-distressed property listings helped push the average home sales-to-listing price ratio to 95.6 percent in June, the highest in three years, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.
HousingPulse reports that median time on market to sell a non-distressed listing fell sharply in June to 11.7 weeks, a drop of a full week from the May reading of 12.7 weeks. As recently as March, the non-distressed property time on market had been 14.0 weeks. The June 2012 time on market for non-distressed listings is the lowest in over two years and substantially below the June 2011 reading of 15.0 weeks.
“Strong demand, particularly in areas of California, Arizona and Nevada, are pushing up home prices very quickly in the short-term. And because many of the home purchases in these areas are cash transactions, there appears to be less braking of prices by our current appraisal system than seen in other parts of the country,” noted Thomas Popik, research director for Campbell Surveys and chief analyst for HousingPulse.
Demand for normal homes is increasing despite the fact that buyers face serious hurdles. Tight credit persists: only 46 percent of applicants for purchase mortgages are getting approved these days, up from 40 percent in December, according to Ellie Mae. Total inventories are tight, down 20 percent from a year ago, and pickings are slimmer in many markets than they have been in years. Nearly one quarter of homeowners with a mortgage are still frozen in place by negative equity and can’t sell or buy