Existing home sales increased nearly 8 percent last month

Distressed homes – foreclosures and short sales typically sold at deep discounts – accounted for 31 percent of sales in August, compared with 29 percent in July and 34 percent in August 2010.

“Investors were more active in absorbing foreclosed properties,” Lawrence Yun, the group’s chief economist, said in a statement. Investors accounted for 22 percent of purchases in August, up from 18 percent the previous month and 21 percent in August 2010. 

First-time buyers purchased 32 percent of homes in August, unchanged from July, below the 50 percent level usually seen in a healthier market. They were 31 percent of buyers a year ago. 

The median existing-home price for all housing types was $168,300 in August, 5.1 percent below August 2010, the report showed.

All-cash sales accounted for 29 percent of transactions in August, unchanged from July, they were 28 percent in August 2010. Investors account for the bulk of cash purchases.

“Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” Yun said. “Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”

Contract cancellations — because of mortgage application refusals or appraisals lower than the sales price — were reported by 18 percent of NAR members in August, up from 16 percent July and 9 percent in August 2010.

The number of previously owned homes on the market declined 3 percent to 3.58 million. At the current sales pace, it would take 8.5 months to sell those houses, down from 9.5 months at the end of the prior month.

Single-family home sales increased 8.5 percent to an annual rate of 4.47 million, from 4.12 million in July, the highest since January. Sales are 20.2 percent above the 3.72 million pace in August 2010.

Existing condominium and co-op sales increased 1.8 percent a seasonally adjusted annual rate of 560,000 in August from 550,000 in July, and are 8.3 percent higher than the 517,000-unit level one year ago. 

Regionally, existing-home sales were up in all regions, 2.7 percent in the Northeast, 3.8 percent in the Midwest, 5.4 percent in the South and 18.3 percent in the West.