New Construction Led Increase at 24 Percent Year Over Year
Home sales increased by 10 percent year over year in March 2014 to a non-seasonally adjusted annual sales pace of 5.17 million, 31.5 percent higher than the 3.93 million pace reported for February. Large month-to-month increases in home sales were expected as we entered the spring selling season. In fact, over the past 15 years, the monthly sales percent increase from the month of February to the month of March averaged 27 percent, even showing a 13-percent increase in March 2008 as the housing market was on a steep decline.
Improvement in March home sales were led by newly constructed homes which increased by 24 percent, followed by re-sales which increased by 19 percent. Distressed sales accounted for 13.7 percent of total sales in March, a strong improvement from the same time a year ago when this category made up 20.4 percent of total sales. REO sales were down 15 percent year over year, accounting for 9.9 percent of total sales. Short sales were down 45 percent year over year, at just 3.8 percent of total sales in March. At its peak, the distressed sales share totaled 32.7 percent of all sales in January 2009, with REO sales making up 28.2 percent of that share. The more recent shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount compared to healthy sales than do short sales. There will always be some amount of distress in the housing market, so one would never expect a 0-percent distressed sales share, but the pre-crisis share of distressed sales was traditionally about 2 percent.
Michigan had the largest share of distressed sales of any state at 29.7 percent in March, followed by Illinois (25.9 percent), Nevada (25.2 percent), Florida (24.3 percent) and Georgia (22.7 percent). California saw a 17.4-percentage point drop in the distressed sales share, the largest of any state. Of the largest 25 Core Based Statistical Areas (CBSAs) based on population, Chicago-Naperville-Arlington Heights, Ill. had the largest share of distressed sales at 28.6 percent, followed by Miami-Miami Beach-Kendall, Fla. (27.6 percent), Las Vegas-Henderson-Paradise, Nev. (26.6 percent), Orlando-Kissimmee-Sanford, Fla. (26.4 percent) and Tampa-St. Petersburg-Clearwater, Fla. (25.2 percent). Sacramento-Roseville-Arden-Arcade, Calif. had the largest drop in its distressed share, falling by 21.1 percentage points from 39.8 percent in March 2013 to 18.7 percent in March 2014.
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