Foreclosure and REO sales declined in June to their smallest share of total sales in four years, Radar Logic Incorporated reported Tuesday.
According to Radar Logic’s RPX Monthly Housing Market Report for June, sales of homes at foreclosure auctions andREO sales by financial institutions fell to their lowest share of sales since 2008.
The fall in distressed sales led to an overall year-over-year gain in the RPX Composite price, which measures statistics in 25 metropolitan areas. However, Radar Logic warned that price gains made in the first half of the year may not last.
“The gains of the first half of 2012 could be short lived,” the company said in a release. “They were the result of seasonal factors and REO disposition strategies that could reverse in the fall. The unusually rapid price appreciation could give way to equally rapid declines in the second half of the year.”
The report also noted that the large latent inventory of homes-including those in bank inventories, underwater homes, and homes in the process of foreclosure-will cause supply to rise, making sustained price gains unlikely in the near future.
“Bottlenecks in the disposition of this latent inventory-in the form of regulation, legislation, and market timing on the part of financial institutions-may cause prices to spike temporarily from time to time, but such spikes will increase the rate at which latent inventory is brought to market and thereby cut off price appreciation,” the release said.
Meanwhile, Radar Logic noted that, when distressed sales are excluded, appreciation in all other sales was marginal. Company CEO Michael Feder said the lack of any real price appreciation may be worse news for the recovery than concerns about looming supply.
“We continue to be concerned that this negative psychology could be the biggest risk threatening any real recovery in housing values,” Feder said. “If it continues, the resultant imbalance between supply and demand could trigger another decline in home values.”