Sales of foreclosed properties up in second quarter

Properties repossessed by lenders through foreclosure accounted for 23 percent of U.S. home-sale transactions during the second quarter, RealtyTrac reported Thursday.

Such sales were 22 percent higher than first-quarter levels and 19 percent above levels for April through June 2011, the foreclosure search engine said.

On Wednesday, the National Association of Realtors said its index measuring contracts for sales of previously owned homes rose 2.4 percent in July from the previous month, to its highest level since April 2010, the final month of a federal tax credit primarily for qualified first-time buyers.

"While the month-to-month movement has been uneven, more important we now have 15 consecutive months of year-over-year gains in contract activity," said the group's chief economist, Lawrence Yun.

In the eight-county Philadelphia region, agreements of sale - which typically close 45 to 60 days after contracts have been signed - were up 10.4 percent year-over-year, according to Prudential Fox & Roach's HomExpert Market Report, based on data from Trend Multiple Listing Service.

These contracts make it "clear that the current sales pace is sustainable and is likely to keep rising," said Holland, Pa., economist Joel L. Naroff.

Yun said limited inventory, especially in the West, continues to constrain sales of pre-owned homes.

Redfin, the Seattle real estate search engine, said Wednesday that its survey of more than 800 people in 19 metro areas confirmed that supply is a major buyer concern.

"Even as prices have begun to rise, the overwhelming issue for most of today's buyers is the selection of homes for sale, not what they cost," said Redfin chief executive Glenn Kelman.

Value-driven investors scooping up foreclosures have largely been replaced by first-timers seeking to buy pretty houses now, when mortgage rates are below 4 percent, he said.

"With so few houses for sale, many will come up empty," said Kelman, adding that two years of both low prices and low home equity will cause a logjam "until higher prices draw more move-up sellers into the market."

The shortage of inventory applies to foreclosures as well, according to RealtyTrac.

"The second-quarter sales numbers provide solid statistical evidence of what we've been hearing anecdotally from real estate agents, buyers, and investors over the past few months: There is a limited supply of available foreclosure inventory to choose from in many markets," said Daren Blomquist, RealtyTrac's vice president.

Three consecutive months, through July, showing an increase in new foreclosure filings "may ease the inventory shortage somewhat in the coming months, when many of these . . . translate into listed short sales or bank-owned homes," Blomquist said.

"The increase in short sales of properties that have not even started the foreclosure process indicates that lenders are moving further upstream . . . thereby avoiding the increasingly complex and lengthy foreclosure process altogether."