A sharp drop in distressed sales is one of the main drivers behind the steady rise in home prices seen in certain areas throughout the country, according to the monthly Campbell/Inside Mortgage Finance HousingPulse survey.
The survey includes responses from about 2,500 real estate agents through the United States.
In September, the HousingPulse Distressed Property Index (DPI), which measures the proportion of purchase transactions involving distressed properties, hit a record low of 38.6 percent based on a three-month moving average.
The drop marks the fifth consecutive monthly decline and is more than 10 percentage points lower than the February’s near-record-high of 48.7 percent.
According to HousingPulse, the lack of foreclosures and REOs available for sale is the reason for the steep decline in distressed sales.
HousingPulse respondents reported major banks seem to be keeping many REO properties off the market this year, but suggested banks may look to release “significant amounts” of bank-owned properties next year, which could lead to lower home prices.
When real estate agents were asked about the impact of the upcoming national elections, responses were mixed, with some agents reporting would-be homebuyers are holding off until after November.
One Georgia-based agent said, “We are seeing middle-to-high-income buyers pausing due to the upcoming elections. We hear it daily.”
An agent in Pennsylvania said, “It [the election] is having a negative effect on home sales in our market. Everyone is waiting to see who gets elected in November.”
Other agents found the opposite was occurring.
“Many of my clients are worried about interest rates rising after the election and feel they may be artificially held down by the current administration,” said one agent in Virginia.
A New York agent said, “I think now people are in a hurry before the election and not knowing what the future will hold after the elections.”
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