(Bloomberg) U.S. homes in the process of foreclosure sold at an average 27 percent discount in the first quarter and purchases of distressed properties fell to less than half the peak set two years ago, according to RealtyTrac Inc.
The discount reflects the price of distressed properties relative to normal sales. A total of 158,434 homes that sold in the period received notices of default, auction or repossession, down 16 percent from the fourth quarter and 36 percent from a year earlier, RealtyTrac said in a report today. At that pace, it would take three years to clear the supply of distressed and bank-owned houses, the Irvine, California-based company said.
"While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery," Chief Executive Officer James Saccacio said in the statement.
Foreclosures are luring all-cash buyers who demand discounts, pushing down the value of all properties. More than three-fourths of U.S. metropolitan areas showed price declines in the first quarter, with foreclosures and short sales accounting for 40 percent of all transactions, the National Association of Realtors said May 10.
About 1.9 million U.S. homes are in some stage of foreclosure, according to RealtyTrac. In the first quarter, the average sales price of a distressed property was $168,321, down 1.9 percent from the fourth quarter and 1.5 percent from a year earlier.
The average discount compared with sales of non-distressed homes was unchanged from the previous quarter and up from 26 percent in the first quarter of 2010.
Ohio had the biggest foreclosure discount, with an average 41 percent, followed by Illinois at more than 40 percent and Kentucky at 39 percent. States where the discount exceeded 35 percent included Maryland, Tennessee, Wisconsin, Delaware, Pennsylvania, Oklahoma and Louisiana, RealtyTrac said.
Bank-owned properties accounted for 107,143 sales in the quarter, down 11 percent from the fourth quarter and almost 30 percent from a year earlier. Sales of homes in default or scheduled for auction totaled 51,291, down almost 26 percent and 45 percent, RealtyTrac said.
The sum was less than half the peak of 348,629 distressed deals in the first quarter of 2009.