Distressed Sales Increased in Only 8 States

Sales of distressed homes, both lender-owned properties (REO) and short-sales continue to decline but are still at levels nearly four times what is considered "normal."  CoreLogic reported on Thursday that distressed sales accounted for 7.8 percent of all home sales in June with sales of REO making up 4.9 percent of the total and short sales 2.9 percent.

The June numbers were down 0.8 percentage points from May and 2.2 points compared to a year earlier.   The REO share was the lowest for any month since September 2007 and has declined from a 27.9 percent share at the peak of market distress in June 2009.  At that time REO and short-sales together had a 32.4 percent market share.

CoreLogic notes that there will always be some level of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about 2 percent. If the current year-over-year decrease in the distressed sales share continues, it will reach that "normal" 2-percent mark in mid-2019.

Only eight states recorded increases in their distressed sales shares in June 2016 compared with a year earlier and none were the closely watched oil producing states.  Maryland had the largest share of distressed sales of any state at 19.4 percent in June 2016, followed by Connecticut (18.4 percent), Michigan (17.6 percent), Illinois (15.8 percent) and New Jersey (15.3 percent).

The oil states continued to see year-over-year declines in their distressed sales shares with Texas down 1.2 percentage points, Oklahoma with a 0.5 percent decrease and North Dakota a 0.1 drown. Florida had a 5.8 percentage point drop in its distressed sales share from a year earlier, the largest decline of any state.