So-called “motivated sales,” or foreclosures, drove a 7 percent increase in home sales across the nation in December, according to data released Wednesday by Radar Logic Inc., a New York-based real estate data and analytics company. Prices declined year-over-year since December 2007 in all 25 metropolitan statistical areas (MSAs) studied. Two MSAs — St. Louis and Denver — posted price inclines in December since the previous month. St. Louis posted a 2.1 percent increase in the price of housing per square foot (a measurement implemented by Radar Logic to remove overall home price factors like location and size), while Denver saw a 1.2 percent increase in the price of housing per square foot. One MSA — Columbus — saw no change since November and two MSAs — Tampa and San Diego — reported declines of less than 1 percent. The falling prices and improving home affordability combined with mortgage rates lingering at historic lows drove the month’s sales increase as well as year-over-year increases in transaction counts in more than half — 14 — of the 25 MSAs studied. Motivated sales rose 177 percent from December 2007 while the sum of all other sales in the MSAs fell by 17 percent, according to the data. Foreclosures represented more than 40 percent of total transactions in Las Vegas, Phoenix and the California MSAs. Meanwhile, MSAs where foreclosure sales have either not increased or make up a small percentage of total sales actually experienced declines in total transactions. So, while the home sale vehicle may have charged uphill in December, the driver was a massive number of foreclosures. It’s unclear now how the path of home sales will look in the coming monthly reports, but a number of foreclosure prevention efforts do not bode well for a sales increase if the current trends continue. GSEs Fannie Mae (FNM) and Freddie Mac (FRE) in November announced a foreclosure and eviction suspension that has been extended through this week to allow time for the Streamlined Modification Program to go into effect at the GSEs, as well as President Barack Obama’s home affordability modification and refinance program to begin. These combined efforts may have temporarily reduced the volume of new foreclosures and foreclosure sales that, when combined with the declining conventional sales indicated by Radar Logic’s data, might lead to declines in sales in coming reports. But the foreclosure problem has not disappeared, and as the report’s writers indicate, may continue to drag down home prices. “There is an enormous inventory of foreclosed homes already on the market, and these homes need to be purchased before home prices can recover,” Radar Logic officials said in the monthly report. “Therefore, initiatives to promote the absorption of the existing inventory of unsold homes, both in and out of foreclosure, are crucial. The government’s initiative to lower mortgage rates will not be sufficient.” Read the report. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.