Distressed Sales Rise in California as Lenders Push Through REO Inventories and Short Sales

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According to the California Association of Realtors (CAR), the California Pending Home Sales Index dropped as expected between November and December, tracking the annual seasonal slowdown.

However, the index was higher than a year ago for the eighth straight month, a trend that bodes well for the start of the spring home-buying season.  C.A.R. also reported that sales of distressed properties increased in December, as lenders pushed to close REOs and short sales to move them off their balance sheets before the end of the year.

Pending home sales:

C.A.R.'s Pending Home Sales Index (PHSI) fell from a revised 108.7 in November to 91.6 in December, based on signed contracts.  The index was up from the revised 82.5 recorded in December 2010, marking the eighth consecutive month that pending sales rose from the previous year.  The decline follows a normal seasonal drop that usually occurs in November and December.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

Distressed housing market data:

• Equity sales made up 52.7 percent of home sales in December, down up from 55.1 percent in November but up from 51.7 percent in December 2010.

• The total share of all distressed property types sold statewide rose to 47.3 percent in December, up from November's 44.9 percent but down from 48.3 percent in December 2010.

• Of the distressed properties sold statewide in December, 22.2 percent were short sales, up from the previous month's share of 21 percent and up from last December's share of 19.6 percent.

• The share of REO sales rose in December to 24.6 percent, up from November's 23.5 percent, but down from the 28.3 percent recorded in December 2010.