Falling home prices resulted in a 3.1 percent increase in sales in July, the largest leap since February. However, 33 to 40 percent of those sales were distressed sales—foreclosures or sales at a loss.
This is the largest percentage to date for distressed sales, which used to be so low economists did not even measure them as a separate category. A year ago, they were less than 10 percent of total sales.
Despite the 3.1 percent increase, sales were still 13.2 percent below July 2007.
“There is still a considerable distance to travel before prices sink to levels necessary to balance supply and demand in the housing market,” Joshua Shapiro, chief domestic economist at the research firm MFR, wrote in a note. (New York Times, Aug. 25)
Distressed sales are the end result of the housing crisis triggered by predatory lenders who lured homebuyers into mortgages with adjustable rates that amounted to highway robbery.
