Nearly 1 in 3 First-Quarter Home Sales A Foreclosure

Nearly 1 out of every 3 U.S. home sales in the first quarter was a foreclosure property as steep price discounts boosted demand for distressed real estate, according to RealtyTrac.

Foreclosure homes accounted for 31% of all residential sales in the 1st quarter of 2010, with the average sales price of properties that sold while in some stage of foreclosure nearly -27% below homes that were not in the process, Irvine, California-based RealtyTrac said.


"In a normal market, only 1% to 2% of home sales are foreclosures, so this is certainly a significant level," Rick Sharga, senior vice president at RealtyTrac, said in an interview.


Total U.S. foreclosure sales in 2009 were up more than 1,100% from 2006 and more than 2,500% from 2005. Foreclosure sales accounted for 29% of all sales in 2009, up from 23% in 2008 and a mere 6% in 2007, the real estate data company said.


Meanwhile, the Sun Belt continued to lead foreclosures nationally, with Nevada, California and Arizona posting the highest percentage of foreclosure sales in the 1st quarter.


Foreclosure sales accounted for 64% of all sales in Nevada in the 1st quarter -- the highest percentage of any state. The state's percentage was down from 65% of all sales in the previous quarter and 75% of overall sales in the first quarter of 2009.


California posted the 2nd highest percentage for U.S. states, with foreclosure sales accounting for 51% of all sales there in the 1st quarter -- up from 50% in the previous quarter, but down from 70% of all sales in the 1st quarter of 2009.


Other states where foreclosure sales accounted for at least one-third of total sales were Massachusetts, Rhode Island, Florida, Michigan, Georgia, Illinois, Idaho and Oregon.


Foreclosures are by far one of the biggest threats to the U.S. housing market. Improvement in the housing market bodes well for the national economy, as it points to better demand in the sector where the first signs of the latest recession took root.