New residential sales up from 2010, but foreclosures predicted to increase

The U.S. Census Bureau and Department of Housing and Urban Development recently released data on the new residential sales reported nationally for August 2011. The data showed sales of new single-family homes were down 2.3 percent form July 2011, but up 6.1 percent from the numbers reported in August 2010.

August sales were at a seasonally adjusted annual rate of 295,000 compared to 302,000 in July 2011 and 278,000 in August 2010. The median sale price of new homes sold in August 2011 was $209,100, with an average price of $246,000. And while new home sales saw a slight increase compared to last year, a new wave of foreclosures is expected to hit the market soon, likely to force home prices down even further.

The increase in foreclosures on the market will be the result of major banks completing foreclosure filings that were backed up due to a review of previous foreclosures that financial institutions mishandled. Due to low staff and improper documentation, bank regulators discovered banks were processing foreclosures incorrectly, harming many homeowners. The banks must now go back and review all foreclosures from 2009 to 2010 to make sure the processing was completed accurately.

The Sacramento Bee recently reported that the Sacramento area expects to be hit hard with a new wave of foreclosures as the banks sort through the back up of filings. According to the news source, the current housing market in the Sacramento area already has one in seven homes in the foreclosure process, with an inventory of distressed properties that could take a year and a half to clear out.

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