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Distressed sales climb as first-time buyers flock to market

January 26, 2011 - A rising number of first-time homebuyers were moving into new homes last month, with many encouraged to jump off the fence to take advantage of lower mortgage rates.

The latest HousingPulse Tracking Survey from Campbell Surveys and Inside Mortgage Finance showed that first-time buyers made up 37.7 percent of a real estate transactions in December, up from 37.2 percent a month earlier and 34.4 percent in October. Many buyers likely returned to the market over the last few months because they wanted to lock in mortgage rates before they climbed much higher, said the report.

Additionally, the percentage of distressed properties as a share of total home sales climbed to 47.2 percent, its highest level since before the recent robo-signing controversy. First-time buyers are often the ones relocating to distressed properties, said the report, and the data could show they were merely waiting for the foreclosure issues to be resolved before they resumed buying discounted distressed properties.

"The combination of increased property supply and growing homebuyer demand caused a blow-out month for home sales," said Thomas Popik, research director for Campbell Surveys. "We knew this was coming because average transactions for our survey respondents rose from 2.9 in November to 3.4 in December."

The most recent mortgage rates report from Freddie Mac pinned the average interest for a 30-year fixed-rate loan at 4.74 percent, well above record-lows from October but still lower than year-ago levels, which were close to 5 percent.
 

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