Foreclosure Sales Tumble in 1Q

Sales of U.S. homes in foreclosure fell in the first quarter, a report from RealtyTrac showed on Thursday, the latest data to suggest the housing market is on the mend.

There were 190,121 properties sold that were in the foreclosure process or already seized by lenders, down 18% from the last quarter of 2012 and a decrease of 22% from the first quarter the year before.

That accounted for 21% of all home sales, down from 25% in the first quarter of 2012. It was also well off the peak of 45% seen during the first quarter of 2009 as the housing market was still reeling from its collapse and the global financial crisis.

"We're on our way back to a normal housing market when it comes to foreclosures," said Daren Blomquist, vice president at RealtyTrac.

Rising home prices, improved sales, tighter inventory and low mortgage rates have all combined to help the housing market get back to its feet over the past year.

While default and foreclosure rates have also improved, they still remain historically elevated. Foreclosure sales averaged less than 5% of all sales in 2005 and 2006 before the housing bubble burst, said Blomquist.

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"This is kind of like an iceberg that's shrinking on the surface but there's still a lot of distress in the market that's probably under the surface and not so obvious," he said.

Sales of homes seized by lenders totaled 101,371 properties, down 16% from the previous quarter. Sales of homes in default but not yet foreclosed on were down 20% to 88,750.

Short sales of properties not in foreclosure, where the home is sold for less than the outstanding loan, also decreased. This suggests some underwater homeowners may be anticipating an increase in home prices will get them back above water.

After increasing last year, short sales fell 10% in the first quarter.

The top five states with the biggest percentage of foreclosure sales were Georgia, Illinois, California, Arizona and Michigan. Foreclosure sales accounted for less than 10% of all sales in Massachusetts, New York and New Jersey.