Foreclosed houses and short sales represented only 33% of the home purchase market in April, down from 35.6% in March and well below the 43.6% rate recorded a year earlier, Campbell/Inside Mortgage Finance said in a new survey.
The sharp drop in distressed real estate sales shows the market gradually moving away from record numbers of REOs in the wake of the housing crash.
Still, the HousingPulse Tracking Survey from Campbell/Inside Mortgage Finance warns banks could still be holding back on the sale of REO inventory until home prices rise further, thereby inflating market prices.
With this in mind, the survey doesn’t rule out the possibility of a spike in distressed property sales in the future.
Investors also slowed their buying activity in April, accounting for only 21.6% of all transactions, the lowest share since November 2012.
When investors do buy, they tend to grab foreclosed properties in need of repair to turn them into rental properties.
Investors still made up 62.8% of all damaged REO purchases last month, down from March, but up from 60.4% a year ago.
Investor purchases through short sales jumped to a record high of 35.3%, the HousingPulse survey said. This figure is up from 31.8% in March and 30.5% a year earlier.