Why did residential sales decline for fourth month straight?
Distressed sales down, investor activity wanes
Residential properties sold at an estimated annual pace of 5,083,241 in February, a 0.2% decline from January but up 7% from February 2013, according to the latest report from RealtyTrac.
February marked the fourth consecutive month where sales activity has fell on a monthly basis. This includes single-family homes, condominiums and townhomes.
There were monthly declines in 31 states, and year-over-year declines in six – including Massachusetts, California, Arizona and Nevada. Twenty-one of the nation’s largest 50 metropolitan areas likewise suffered sales volume declines, including Phoenix, Orlando, Las Vegas and Detroit, among others.
“Supply and demand have reached a bit of a standoff in this uneven real estate recovery,” said Daren Blomquist, vice president at RealtyTrac. “The supply of distressed properties — which buyers and investors have come to rely on over the past few years — is evaporating quickly in most markets, but that dwindling supply is not being adequately replenished by non-distressed homeowners listing their homes or by new homes being built.”
Blomquist noted that some of the volume decline is from institutional investors, a primary driver over the past two years. Investor activity has declined in the last several months.
“It’s not yet clear if that diminishing demand will be filled by first-time homebuyers and move-up buyers,” he said.
The national median sales price of U.S. residential properties — including both distressed and non-distressed sales — was $164,667 in February, down 1% from the previous month but up 4% from February 2013. February marked the 20th consecutive month where the U.S. median price increased or stayed flat annually, but it was the second consecutive month with a monthly decrease.
Distressed sales and short sales account for 17% of all sales in February
Short sales and distressed sales — in foreclosure or bank-owned — accounted for 16.9% of all sales in February, up from 16.1% of sales in January but down from 19.1% of sales in February 2013. The median price of distressed properties — in foreclosure or bank-owned — was $96,606 in February, 44% below the median price of non-distressed properties: $172,339.
Short sales nationwide accounted for 5.7% of all sales, up from 5.5% in January but down from 6.9% a year ago. Metro areas with the highest percentage of short sales included Las Vegas (17.0%), Orlando (16.8%), Tampa (14.9%), Memphis (14.5%), and Miami (12.3%). The percentage of short sales decreased from a year ago in all of these metros.