They reached a non-seasonally adjusted 4.62 million annual sales pace, just slightly below the 4.64 million pace reported for November. Overall, there were 4.89 million home sales in 2013, making it the best year for home sales since 2008.
Improvement in December home sales was led by re-sales which increased by 12%, followed by sales of newly constructed homes which increased by 10%. Meanwhile, real estate owned (REO) sales and short sales decreased by 3% and 32% respectively, continuing the trend in the shift away from distressed sales towards healthy home sales.
Distressed sales accounted for 17.4% of total sales in December 2013, a strong improvement from a year ago when they were 21.6% of total sales. Distressed sales are made up of REO and short sales, which were 11.7% and 5.7%, respectively, of total sales in December.
The distressed sales share peaked in January 2009 at 32.9% of all sales, while REO sales made up 28.3% of the total sales share at their peak. The report said that this shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount to healthy sales than short sales do.
‘There will always be some amount of distress in the housing market, so a 0% distressed sales share is unrealistic, but the pre-crisis share of distressed sales was traditionally about 2%,’ it added.
Michigan had the largest share of distressed sales of any state at 34.3% in December, followed by Nevada at 32.2%, Illinois at 27.4%, Florida at 25.8% and Georgia at 24.6%.
California experienced a 17.8% point drop in the distressed sales share, the largest decline of any state. Of the largest 25 Core Based Statistical Areas (CBSAs), Chicago-Naperville-Arlington Heights, Illinois, had the largest share of distressed sales at 30.7%, followed by Orlando-Kissimmee-Sanford, Florida at 30.3%, Miami-Miami Beach-Kendall at 28.8%, Atlanta-Sandy Springs-Roswell at 27% and Warren-Troy-Farmington Hills, Michigan at 26.5%.
Las Vegas-Henderson-Paradise, Nevada, had the largest drop in the distressed share of the top CBSAs, falling by 24% from 48.1% in December 2012 to 24.1% in December 2013.
