Distressed sales—real estate-owned and short sales—accounted for 9.9% of total home sales nationally in May 2015, down 2.8 percentage points from May 2014 and down 1.7 percentage points from April 2015, according to CoreLogic.

Distressed sales shares typically decrease month over month in May due to seasonal factors, and this distressed sales share was the lowest for the month of May since 2007 when it was 5%.

Within the distressed category, REO sales accounted for 6.4% and short sales made up 3.5% of total home sales in May 2015. The REO sales share was the lowest since October 2007 when it was 6%. The short sales share fell below 4% in mid-2014 and has remained stable since then. At its peak in January 2009, distressed sales totaled 32.4% of all sales, with REO sales representing 27.9% of that share.

The ongoing shift away from REO sales is a driver of improving home prices since bank-owned properties typically sell at a larger discount than short sales. There will always be some level of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about 2%. If the current year-over-year decrease in the distressed sales share continues, it would reach that "normal" 2-percent mark in mid-2018.

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(Source: CoreLogic)

Michigan had the largest share of distressed sales of any state at 21.4% in May 2015, followed by Florida (21.3%), Maryland (20.3%), Illinois (19.4%) and Connecticut (19.3%).

Nevada had a 7.0 percentage point drop in its distressed sales share from a year earlier, the largest decline of any state. California had the largest improvement of any state from its peak distressed sales share, falling 58.1 percentage points from its January 2009 peak of 67.5%. While some states stand out as having high distressed sales shares, only North Dakota and the District of Columbia are even close to their pre-crisis numbers (within one percentage point).

Of the 25 largest Core Based Statistical Areas (CBSAs) based on loan count, Orlando-Kissimmee-Sanford, Fla. had the largest share of distressed sales at 24.6%, followed by Miami-Miami Beach-Kendall, Fla. (23.3%), Tampa-St. Petersburg-Clearwater, Fla. (22.9%), Chicago-Naperville-Arlington Heights, Ill. (22.2%) and Baltimore-Columbia-Towson, Md. (20.1%).

Atlanta-Sandy Springs-Roswell, Ga. had the largest year-over-year drop in its distressed sales share, falling by 7.6 percentage points from 22.4% in May 2014 to 14.8% in May 2015. Riverside-San Bernardino-Ontario, Calif. had the largest overall improvement in its distressed sales share from its peak value, dropping from 76.3% in February 2009 to 12.3% in May 2015.