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Dead House Bounce
There is gigantic clearance sale going on in housing. Sales of existing homes rose 5.5 percent in September from August and climbed 1.4 percent from September 2007, the National Association of Realtors estimates. It was the best monthly performance in five years.
The gain in sales, however, is coming as home prices continue to fall and as troubled homeowners with too-expensive mortgages lose their homes.
"Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions," says Lawrence Yun, the chief economist for the trade group.
Earlier this week, MDA DataQuick, a San Diego real estate tracking service, said sales in California -- Ground Zero of the housing crisis -- surged nearly 65 percent in September from a year ago. More than half were a result of foreclosures.
The Realtors also said that housing inventory shrunk, by 1.6 percent, in September.
Paul Jackson on Housing Wire is skeptical that the glut in housing is easing. For one, there is a large "shadow inventory" of homes that have been pulled off the market by borrowers who are trying to wait out the slump. And while the pace of foreclosures has slowed, that is largely a temporary phenomenon, caused by the intervention of state and local governments in the foreclosure process.
RealtyTrac said on Thursday that the number of foreclosure filings nationwide -- the total of default notices, auction sale notices and bank repossessions -- fell 12 percent in September from August, to 265,968 properties.
"Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures," said James Saccacio, chief executive of RealtyTrac.
More houses will come on the market in the coming months as the economy worsens and as the pace of foreclosures picks up. Bottom is still a long way down.
Also on Portfolio.com:
- The Upside of the Downturn
- Art of the Deals: Cartoon Roundup
- Weekly Intelligence: the Porfolio.com News Quiz
- Credit Crunched: A Special Report on Wall Street Chaos
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