They don’t ask why foreclosures are declining – did they just stop foreclosing? From NMN:
Home prices are rising again due to the slowdown in REO sales and a decline in the shadow inventory of seriously delinquent loans hanging over the housing market, according to experts.
“House prices are improving as the share of distressed sales recedes,” according to a new analysis from the Wells Fargo Securities Economics Group.
In its latest ‘Housing Chartbook’ Wells notes that distressed sales have declined to 25% of all sales in June from 35% in January. During the same period, REO sales fell to 13% of all transactions and short sales rose to 12%.
“In the coming year, we could continue to see an uptick in short sales, while foreclosures stall,” the WFS economists say.
Meanwhile, the shadow inventory is slowly improving and new serious delinquency starts are falling, according to CoreLogic chief economist Mark Fleming.
“The decline in shadow inventory is a potential indicator of a brighter future in housing,” he says in the latest CoreLogic ‘MarketPulse’ report.
Nonperforming loans moving out of the shadow inventory and through the foreclosure process are “particularly damaging to prices, especially when they end in REO sales,” Fleming said. “CoreLogic’s research shows that falling REO sales strongly correlate to price appreciation.”
Since there is no visible excess of homes on the market now, Fleming says it’s possible the housing market will avoid another slide in home prices this fall and winter.
“Housing markets may well avoid another Sisyphean slide this fall because of a better balance of inventory, declining REO sale shares, and a slowly declining foreclosure inventory,” he said.
The CoreLogic house price index shows values rose 1.3% from May to June. Prices are up 2.5% from June 2011. Excluding distressed sales, values rose 3.2% from a year ago.