Pending Home Sales Fall in April, Foreclosed Properties Attract Buyers

The National Association of Retailers (NAR) reported this morning that its pending home sales index for April fell to 95.5 from a revised reading of 101.1 in March, the first decline following 3 consecutive months of growth. The April 2012 reading remains well above the 83.5 reading for April of 2011.

The NAR’s chief economist said:

Housing market activity has clearly broken out at notably higher levels and is on track to see the best performance since 2007. All of the major housing market indicators are expected to trend gradually up, but a new federal budget must be passed before the end of the year for the economy to continue to move forward.

The NAR also released a study of foreclosure sales today indicating that 92% of potential home buyers would be interested in buying a foreclosed property for their own occupancy, not as investment properties. The NAR said this reflects 300% growth in interest in buying foreclosed properties as owner-occupied homes:

[H]omebuyer interest in foreclosures jumped 159 percent since October 2009 when foreclosures accounted for 29 percent of all home sales. In fact, more than two-thirds (64.9%) of today’s homebuyers said they’re likely to buy a foreclosure compared to 25.3 percent two and a half years ago. Only 6.9 percent of today’s potential home buyers are interested in buying a foreclosure as an investment, down from 13.2 percent in October 2009.

Another interesting result from the NAR’s foreclosure data is who gets the blame for the US housing collapse:

Americans blame the economy and job losses (22.2%), lenders (24.8%) and the government (22.1%) equally responsible for the foreclosure problems facing the nation today. Defaulting homeowners (10.3%) and Wall Street (9.4%) were least blamed by survey respondents. Homeowners with annual incomes of $40,000 or more (30%) and those age 25 to 64 (29%) blame lenders more than other groups, while older Americans 65+ (32.8%) and those earning over $50,000 (26%) blame government most. Younger consumers (18-24) are more likely to blame the economy (28.7%) and defaulting homeowners (26.9%) for today’s foreclosure problems.

Wall Street gets the least blame! You can’t make this stuff up.

The foreclosure survey results are available here.

Paul Ausick